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PARECON

LIFE AFTER CAPITALISM

[participatory economies

MICHAEL ALBERT

Parecon

Life After Capitalism

MICHAEL ALBERT

London ■ New York

First published by Verso 2003

© Michael Albert 2003
All rights reserved

The moral rights of the author have been asserted

13579 10 8642

Verso

UK: 6 Meard Street, London W1F 0EG
USA: 180 Varick Street, New York, NY 10014-4606
www.versobooks.com

Verso is the imprint of New Left Books
ISBN 1-85984-698-X

British Library Cataloguing in Publication Data
A catalogue record for this book is available from the British Library

Library of Congress Cataloging-in-Publication Data
A catalog record for this book is available from the Library of Congress

Printed in the UK by Biddles Ltd, Guildford and King's Lynn
www.biddles.co.uk

Table of Contents

Introduction

o Parecon and Globalization

■ Rejecting Capitalist Globalization

■ Supporting Global justice

■ Anti-Capitalist Globalization And Economic Vision

■ Summarizing Participatory Economics
o Parecon and Visionary Practice

What Is An Economy?

o

Kev Economic Dynamics and Institutions

■ Ownership Relations

■ Allocation Institutions

■ Division of Labor

■ Remuneration

■ Decision-Making

o

Economies

o

Class Structure

o

So, What Is An Economy?

Economic Values

O

Eguitv

■ Eguitv 1: Income

■ Eguitv 2: Circumstances

O

Self-Management

O

Diversity

O

Solidarity

O

Efficiency

ludqinq Economies

O

Private Ownership

O

Corporate Divisions of Labor

O

Central Planning

O

Markets

■ Eguitv

■ Solidarity

■ Self-Management

■ Efficiency

O

Capitalism

O

Market Socialism

O

Centrallv Planned Socialism

O

Green Bioregionalism

O

A New Vision

Ownership

Councils

o Workers' Councils
o Consumers' Councils
o Consensus?

lob Complexes
Remuneration

o The Logic of Remunerative justice

Allocation

o Participatory Information & Communication

■ First Communicative Tool: Prices

■ Second Communicative Tool: Measures of Work

■ Third Communicative Tool: Qualitative Activity
o Allocation Organization

■ Steps of Participatory Planning
o A Typical Planning Process

o The Problem of Externalities

■ Collective Consumption

■ Individual Consumption
o Conclusion

Summary and Defense

o Workers' Councils and Balanced lob Complexes
o Consumers' Councils and Remuneration for Effort and Sacrifice
o Participatory Planning
o Conclusion

Evaluating Parecon

o Equity
o Solidarity
o Diversity
o Self-Management

■ Production

■ Consumption

■ Allocation
o Classlessness

Working

o Capitalist Publishing
o Participatory Publishing: Northstart Press

■ lob Complexes

■ Councils

■ Larry's Work Week

o Decision-Making at a Capitalist Firm
o Decision-Making at Northstart

■ Last Year at Northstart

■ Northstart Innovations

■ The First Planning Iteration: Nancy's Initial Proposal

■ The Second Planning Iteration

■ The Third Planning Iteration

■ The Fourth. Fifth, and Sixth Planning Iterations

■ The Seventh Planning Iteration
o Northstart Efficiency

o Workplace Planning: Personal Texture

■ An Overview of lohn Henry Planning

■ Choosing Between Alternative Production Schemes

■ The Intricacies of "Working Overtime"

■ Evaluating and "Bartering"

■ Differential Productivity in "Competing" Steel Plants

■ Daily Decision-Making at lesse Owens Airport

■ Hiring and Firing

Consuming

o Collective Consumption

■ The Capitalist Case

■ The Participatory Case
o Individual Consumption

■ The Capitalist Case

■ The Participatory Case
o Consumption Planning

■ Determining Countv-Level Collective Consumption

■ Determining Personal Consumption Proposals

Allocating

o Long-Term Plans
o Preparing Data for the First Round
o Revising Data in Subseguent Iterations
o Working at a Facilitation Board
o Qualitative Information

Efficiency

Productivity

Creativity / Quality

Meritocracy / Innovation

o Merit
o Innovation

Privacy / Frenzy

o A Busybody Economy?
o Dictatorship of the Sociable
o Too Many Meetings?

Individuals / Society
o Privileging Individuals?
o Over-Privileging Society?

Participatory?

o Market Allocation By Another Name?
o Central Planning By Another Name?

Flexibility

• Elevating Need?

• Compatibility

• Human Nature

• Asset or Debit?

• Excitement / Attainability

o Excitement
o Attainability

• Brief Bibliography

• Index

Acknowledgments

For every book many people contribute words, style, and ideas, not to
mention experiences. When a book calls on decades of collective
experience and centuries of history, giving comprehensive thanks is
impossible. Still ...

Thanks go firstly to Robin Hahnel with whom my contributions to the
participatory economic vision were produced in tandem.

To Andrea Sargent who edited the entire manuscript and is
overwhelmingly responsible for whatever clarity it has.

To members of South End Press now and in the past for helping create
the practice behind many of Parecon's ideas.

To students at ZMI for their challenging discussions of the vision.

To volunteers and co-workers in current projects, Z and ZNet, and in
past efforts as well, for continuous feedback.

To audiences at public talks who have heard and debated the contents
herein. To participants in the ZNet forum system, who have pursued
the ideas in that venue.

To those who have created institutions employing Parecon 's insights
and relayed their experiences.

And to a few additional special individuals, as well, whose contributions
arrive via all the above routes and are so bountiful that personal
mention is mandatory: Justin Podur, Tim Allen, Brian Dominick,

Stephen Shalom, Cynthia Peters, Noam Chomsky, and Lydia Sargent.

And of course to Verso Books, for publishing Parecon, to Tariq Ali for
championing it, to Sebastien Budgen for excellent editorial assistance,
to Tim Clark for production work, to Gavin Everall for promotion, and to
everyone else at Verso for being there, and for caring about economic
vision.

Introduction

Most everybody I see knows the truth
but they just don't know that they know it.

— Woody Guthrie

The British Victorian liberal thinker John Stuart Mill (1806-1873) tells us
that we ...

are not charmed with the ideal of life held out by those who think that the normal
state of human beings is that of struggling to get on; that the trampling, crushing,
elbowing, and treading on each other's heels which form the existing type of social
life are the most desirable lot of human beings.

The American social critic Noam Chomsky says he ...

would like to believe that people have an instinct for freedom, that they really want
to control their own affairs. They don't want to be pushed around, ordered,
oppressed, etc., and they want a chance to do things that make sense like
constructive work in a way that they control, or maybe control together with others.

If "trampling, crushing, elbowing, and treading" are not the "most
desirable lot" for humanity, what is? If humanity should not aspire to
create an elite minority joyfully dancing atop a suffocating
mountainous majority, what should we aspire to? If the instinct to not
be "pushed around, ordered, oppressed" and to do "constructive work
in a way that [we] control" deserves exploring, where should we
begin?

The United States has about 3 percent of the world's population yet
does nearly half the world's consuming. Within the US, about 2 percent
of the population own 60 percent of the wealth. Other developed
nations are similarly unequal. Less developed countries suffer broadly
the same internal distribution, though there the richest are less
wealthy and the poorest are more destitute.

Indignity, disempowerment, and hunger accompany capitalism
worldwide. No one sensibly denies this, yet even among those who
despise capitalism, most fear that suffering would increase without it.
While some certainly find capitalism odious, few celebrate an
alternative and those who do generally favor "market socialism,"
"centrally planned socialism,” or "green bioregionalism." In contrast,
this book rejects capitalism but also the typically favored alternatives.
The English humanist William Morris (1834-1896) ...

[sought] a condition of society in which there should be neither rich nor poor, neither
master nor master's man, neither idle nor overworked, neither brain-sick brain
workers nor heartsick hand workers, in a word, in which all would be living in equality
of condition and would manage their affairs unwastefully, and with the full
consciousness that harm to one would mean harm to all—the realization at last of the
meaning of the word commonwealth.

But how can we undertake economics to usher in Morris's "common¬
wealth"? How do we reward and ennoble work? How do we enrich
consumption and make it more equitable? How do we make allocation
just and efficient? Can we enjoy efficiency, justice, democracy, and
integrity simultaneously?

Part I of this book discusses economic values and institutions, part II
describes participatory economics and argues its benefits, part III
explores daily life implications of a participatory economy, part IV
rebuts plausible worries. First, we briefly address how economic vision
relates to anti-corporate globalization and other economic aims
garnering support around the world.

Parecon and Globalization

Anti-corporate globalization activists favor sympathetic and mutually
beneficial global ties to advance equity, solidarity, diversity, and self¬
management. Globalize equity not poverty. Globalize solidarity not
greed. Globalize diversity not conformity. Globalize democracy not
subordination. Globalize sustainability not rapaciousness. Two
questions arise.

• Why do these aspirations cause anti-corporate globalization
activists to be critical of corporate globalization?

• What new institutions do anti-corporate globalization activists
propose to do a better job than those that now exist?

Rejecting Capitalist Globalization

Current international market trading overwhelmingly benefits those
who enter exchanges already possessing the most assets. When trade
occurs between a US multinational and a local entity in Mexico,

Nigeria, or Thailand, the trade doesn't provide greater benefit to the
weaker party that has fewer assets, nor are the benefits divided
equally. Rather, benefits go disproportionately to the stronger traders
who thereby increase their relative dominance.

Opportunist rhetoric aside, capitalist globalization's flow of resources,
assets, outputs, cash, capital, and harmful by-products primarily
further empowers the already powerful and further enriches the
already rich at the expense of the weak and poor. The result is that at
the turn of the twenty-first century of the 100 largest economies in the
world, almost exactly half are not countries but are private, profit-
seeking corporations.

Similarly, market competition for resources, revenues, and audience is
nearly always a zero-sum game. Each actor advances at the expense
of others so that capitalist globalization promotes a self-interested
"me-first" logic that generates hostility and destroys solidarity
between actors. This dynamic occurs from individuals through
industries and states. Collectively beneficial public and social goods
like parks, health-care, education, and social infra- structure are
downplayed while individually enjoyed private goods are prioritized.
Businesses and nations augment their own profits and simultaneously
impose harsh losses on weak constituencies. Humanity's well-being
doesn't guide the process but is instead sacrificed on behalf of private
profit. Against capitalist globalization solidarity fights a rearguard
battle even to exist, much less to predominate.

Moreover, cultural communities' values disperse only as widely as their
megaphones permit, and worse, are frequently drowned out by
communities with larger megaphones impinging on them. Thus
capitalist globalization swamps quality with quantity. It creates cultural
homogenization not cultural diversity. Not only do McDonald's and
Starbucks proliferate, so do Hollywood images and Madison Avenue
styles. The indigenous and non-commercial suffer. Diversity declines.

At the same time, only political and corporate elites inhabit the
decision making halls of the capitalist globalizers. The idea that the
broad public of working people, consumers, farmers, the poor, and the
disenfranchised should have proportionate say is considered ludicrous.
Capitalist globalization's agenda is precisely to reduce the influence of
whole populations to the advantage of Western corporate and political
rule. Capitalist globalization imposes hierarchy not only in economies,
but also in politics where it fosters authoritarian state structures. It
steadily reduces the number of people who have any say over their
own communities, much less over nations, or the planet. And as the
financiers in corporate headquarters extend their shareholders'
powers, the earth beneath our feet is dug, drowned, and paved with no
attention to species, ecology, or humanity. Profit and power drive all
calculations.

In sum, capitalist globalization produces poverty, ill health, shortened
life spans, reduced quality of life, and ecological collapse. Anti¬
globalization activists, who might more usefully be called
internationalist activists, oppose capitalist globalization precisely
because it so aggressively violates the equity, diversity, solidarity, self¬
management, and ecological balance essential to a better world.

Supporting Global Justice

But rejecting capitalist globalization is not sufficient. What specific
global exchange norms and institutions would do better than what we
endure? Do anti-globalization activists propose any alternatives to
replace the International Monetary Fund (IMF), the World Bank, and the
World Trade Organization (WTO)?

The International Monetary Fund and World Bank were established
after World War II. The IMF was intended to combat financial
disruptions adversely affecting people around the world. It employed
negotiation and pressure to stabilize currencies and help countries
avoid economy-disrupting financial machinations. The World Bank, on
the other hand, was created to facilitate long-term investment in
underdeveloped countries as a means of expanding and strengthening
their economies. It was to lend major investment money at low interest
rates to offset the lack of local capacity. Within then existing market
relations, these limited goals were positive. In time, however, and most
dramatically in the 1980s, these institutions changed. Instead of
working to facilitate stable exchange rates and to help countries
protect themselves against financial fluctuations, the IMF's priority
became bashing down all obstacles to capital flow and unfettered
profit-seeking—virtually the opposite of its mandate. And in parallel,

instead of facilitating investment on behalf of local poor economies,
the World Bank became a tool of the IMF, providing loans to reward
countries that offered open corporate access while withholding loans to
punish those that did not, and financing projects not with an eye to
enlarging benefits for the recipient country but to seeking profits for
major multinationals.

The World Trade Organization that was first conceived in the early
postwar period came into being only decades later, in the mid- 1990s.
Its agenda became to regulate all trade on behalf of the rich and
powerful. IMF and World Bank policies were already imposing on Third
World countries low wages and high pollution by coercing their weak or
bought-off governments. The new insight was why shouldn't we
weaken governments and agencies that might defend workers,
consumers, or the environment, not only in the Third World, but
everywhere? Why not remove all efforts to limit trade due to its
adverse labor, ecological, social, cultural, or development implications,
leaving as the only legal criterion for regulation whether short-term
profits can be made? If national or local laws impede trade—say an
environmental, health, or labor law—why not have a WTO that can
render predictably pro-corporate verdicts to trump governments and
populations on behalf of corporate profits?

The full story about these three centrally important global institutions
is longer than indicated above, of course, but even with only the brief
overview, it is easy to propose improvements.

First, why not replace the IMF, the World Bank, and the WTO, with an
International Asset Agency, a Global Investment Assist- ance Agency,
and a World Trade Agency? These three new institutions would work to
attain equity, solidarity, diversity, self-management, and ecological
balance in international financial, trade, and cultural exchange. They
would seek to direct the benefits of trade and investment
disproportionately to weaker and poorer parties, not to richer and more
powerful ones. They would prioritize national aims, cultural identity,
and equitable development above commercialism. They would protect
domestic laws, rules, and regulations designed to promote worker,
consumer, environmental, health, safety, human rights, animal
protection, or other non-profit centered interests by rewarding those
who attain such aims most successfully. They would advance
democracy by enlarging the choices available to democratically
controlled governments and subordinating the desires of multinationals
and large economies to the survival, growth, and diversification of
smaller units.

Similarly these new institutions would not promote global trade at the
expense of local economic development nor would they force Third
World countries to open their markets to rich multinationals and to
abandon efforts to protect infant domestic industries. Instead of
downgrading international health, environmental, and other standards
through a process called "downward harmonization," they would work
to upgrade standards via "upward equalization." The new institutions
would not limit government ability to use purchasing dollars for human
rights, environmental, worker rights, and other non-commercial
purposes, but would advise and facilitate doing just that. They would
advocate countries treating products differently if they were made with
brutalized child labor, with workers exposed to toxins, or with no
regard for species protection.

Instead of bankers and bureaucrats carrying out the policies of
presidents to affect the lives of the very many without even a pretense
at participation by those impacted on, the new institutions would be
transparent, participatory, and bottom-up, with local, popular,
democratic accountability. They would promote and organize
international cooperation to restrain out-of-control global corporations,
capital, and markets by regulating them so that people in local
communities could control their own lives. They would promote trade
that reduces financial volatility, enlarges democracy at every level
from the local to the global, enriches human rights for all people,
fosters environmental sustainability worldwide, and facilitates
economic advancement of the most oppressed and exploited groups.

The new institutions would encourage the major industrial countries to
coordinate their economic policies, currency exchange rates, and
short-term capital flows in the public interest and not for private profit.
They would establish standards to regulate financial institutions,
directing the shift of financial resources from speculative profit-seeking
to productive, sustainable development. They would establish taxes on
currency transactions to reduce destabilizing short-term cross-border
financial flows and to provide funds for investment in long-term
environmentally and socially sustainable development in poor
communities and countries. They would create public international
investment funds to meet human and environmental needs and to
ensure adequate global demand by channeling funds into sustainable
long-term investment.

The new institutions would also work to get wealthy countries to write
off the debts of impoverished countries and create a permanent
insolvency mechanism for adjusting the debts of highly indebted
nations. They would use regulatory institutions to help establish public

control over global corporations and to curtail corporate evasion of
local, state, and national law.

In addition, beyond getting rid of the IMF, World Bank, and WTO and
replacing them with the dramatically new and different structures,
anti-corporate globalization activists also advocate a recognition that
international relations should not derive from centralized but rather
from bottom-up institutions. New institutions should gain their
credibility and power from an array of arrangements and ties enacted
at the level of citizens, neighborhoods, states, nations, and groups of
nations on which they rest. And these more grassroots structures and
bodies of debate and agenda-setting should also be transparent,
participatory, and guided by a mandate that prioritizes equity,
solidarity, diversity, self-management, and ecological sustainability
and balance.

The overall idea is simple. The problem isn't international relations per
se. Anti-capitalist globalization activists are unrepentantly
internationalist. The problem is that capitalist globalization seeks to
alter international exchange to further benefit the rich and powerful at
the expense of the poor and weak. In contrast, internationalists want to
alter international exchange to weaken the rich and powerful and
empower the poor and weak. Inter- nationally we want global justice
and not capitalist globalization. But what do we want inside our own
countries? This is where the link between the profoundly important
anti-capitalist globalization movements and the rest of this book
derives.

Anti-Capitalist Globalization And Economic Vision

Even if internationalist activists seek alternative global economic
institutions as above, a vision problem persists. International
structures certainly impose severe constraints on domestic choices. At
the same time, however, global relations are propelled by pressures
from domestic economies and institutions. The IMF, World Bank, and
WTO impose on countries markets and corporate divisions of labor. But
likewise domestic markets and corporations around the world propel
capitalist globalization.

When activists offer a vision for a people-serving and democracy¬
enhancing internationalism we urge constructing a very good
International Asset Agency, Global Investment Assistance Agency, and
Global Trade Agency on top of the very bad domestic economies we
currently endure. Suppose we win the sought gains. Persisting

corporations and multinationals in each country would not positively
augment and enforce the new international structures, but would
instead continually emanate pressures to return global relations to
more rapacious ways. At an intuitive level people actually understand
this. When average folks ask anti-globalization activists "What do you
want?", they aren't only asking us what we seek internationally. They
also wonder what we seek domestically. What do we want inside
countries that would augment the international gains we seek and
make fighting for them more than useless posturing?

If we have capitalism, many people rightly reason, there will inevitably
be tremendous pressures toward capitalist globalization and against
anti-capitalist internationalism. IAA, GIAA, GTA, and more local
alliances and structures sound positive, but even if immense exertions
put them in place, won't domestic economies around the world undo
the gains? The question is warranted.

Capitalist globalization is markets, corporations, and class structure
writ large. To replace capitalist globalization and not just temporarily
mitigate its effects or stall its enlargement, don't we have to move
toward replacing capitalism as well? If efforts to improve global
relations through creating the new international regulatory institutions
we propose are an end in themselves, won't they be rolled back? To
persist, don't they have to be part of a larger project to transform
underlying capitalist structures? If we have no vision for that larger
project, if we offer no alternative to markets and corporations, won't
our gains be temporary?

So, many people deduce, why should we apply our energies and time
to the struggles that you propose when we believe that even if we
successfully won all the gains you seek, in time those gains would be
wiped out by resurgent capitalist dynamics? You keep telling us how
powerful and encompassing capitalism is. We believe you. If the efforts
you propose don't lead to entirely new economies, they will eventually
be rolled back to all the same old rot. It isn't worth my time to seek
gains that will be undone.

This assessment is fueled by the reactionary belief that "there is no
alternative.” To combat this belief anti-globalization activists must not
only offer an alternative regarding global economics, but also an
alternative regarding domestic economies. People need to feel that the
application of their energies to opposing corporate globalization won't
have only a quickly undone short-term impact, but will win permanent
gains. So what should replace capitalism?

Summarizing Participatory Economics

Capitalism revolves around private ownership of the means of
production, market allocation, and corporate divisions of labor. It
remunerates property, power, and, to a limited extent, contribution to
output, resulting in huge differences in wealth and income. Class
divisions arise from differences in property ownership and differential
access to empowered versus subservient work. Class divisions induce
huge differences in decision-making influence and quality of life.

Buyers and sellers fleece one another and the public suffers anti-social
investment, toxic individualism, and ecological decay.

To transcend capitalism, parecon-oriented anti-globalization activists
would offer an institutional vision derived from the same values we
listed earlier for shaping alternative global aims: equity, solidarity,
diversity, self-management, and ecological balance.

Such activists would urge that each workplace be owned in equal part
by all citizens so that ownership conveys no special rights or income
advantages. Bill Gates wouldn't own a massive proportion of the
means by which software is produced. We all would own it equally, so
that ownership would have no bearing on the dis- tribution of income,
wealth, or power. In this way the ills of garnering wealth through
profits would disappear.

Next, argues the internationalist advocate, workers and consumers
would develop and express their desires via democratic councils with
the norm for decisions being that methods of dispersing information
and for arriving at and tallying preferences into decisions should
convey to each party involved, to the extent possible, influence over
decisions in proportion to the degree he or she will be affected by
them. Councils would be the vehicle of decision-making power and
would exist at many levels, including smaller work groups, teams, and
individuals, and broader workplaces and whole industries, as well as
individual consumers, neighborhoods, counties, and larger. Votes could
be majority rule, three-quarters, two-thirds, consensus, etc. and would
be taken at different levels and with fewer or more participants and
voting rules depending on the particular implications of the decisions in
question. Sometimes a team or individual would make a decision.
Sometimes a whole workplace, an industry, a neighborhood, or a
county would decide. Different decisions would employ different voting
and tallying methods. There would be no a priori correct, detailed
option, but there would be a right norm to implement: decision-making
input in proportion as one is affected by decisions.

Next comes the organization of work. Who does what tasks in what
combinations?

Each actor does a job, and each job of course includes a variety of
tasks. In rejecting current corporate divisions of labor, we decide to
balance for their empowerment and quality of life implications the
tasks each actor does. Every person participating in creating new
products is a worker, and each worker has a balanced job complex,
meaning the combination of tasks and responsibilities each worker has
would accord them the same empowerment and quality of life benefits
as the combination every other worker has. Unlike the current system,
we would not have a division between those who overwhelmingly
monopolize empowering, fulfilling, and engaging tasks and those who
are overwhelmingly saddled with rote, obedient, and dangerous tasks.
For reasons of equity and especially to create the conditions of
democratic participation and self- management, balanced job
complexes would ensure that when we each participate in our
workplace and industry decision-making, we have been comparably
prepared by our work with confidence, skills, and knowledge to do so.
The contrary situation now is that some people have great confidence,
decision-making skills, and relevant knowledge obtained through their
daily work, while other people are only tired, de-skilled, and lacking
relevant knowledge as a result of theirs. Balanced job complexes do
away with this division. They complete the task of removing class
divisions that is begun by eliminating private ownership of capital.
They eliminate, that is, not only the role of capitalist with its
disproportionate power and wealth, but also the role of decision
monopolizing producer who is accorded status over and above all
others. Balanced job complexes retain needed conceptual and
coordinative tasks and expertise, but apportion these to produce true
democracy and classlessness.

But what about remuneration? We work. This of course entitles us to a
share of the product of work. But how much?

The pareconist internationalist says that we ought to receive for our
labors remuneration in tune with how hard we have worked, how long
we have worked, and how great a sacrifice we have made in our work.
We shouldn't get more because we use more productive tools, have
more skills, or have greater inborn talent, much less should we get
more because we have more power or own more property. We should
get more only by virtue of how much effort we have expended or how
much sacrifice we have endured in our useful work. This is morally
appropriate, and it also provides proper incentives by rewarding only
what we can affect and not what is beyond our control.

With balanced job complexes, if Emma and Edward each work for eight
hours at the same pace, they will receive the same income. This is so
no matter what their particular job may be, no matter what workplaces
they are in and how different their mix of tasks is, and no matter how
talented they are, because if they work at a balanced job complex their
total workload will be similar in its quality of life implications and
empowerment effects. The only difference to reward people doing
balanced jobs for will be length and intensity of work done. If these too
are equal, the share of output earned will be equal. If length of time
working or intensity of work differ somewhat, so will the share of
output one earns.

And who makes decisions about the definition of job complexes and
who evaluates the rates and intensities of people's work? Workers do,
of course, in their councils, using information culled by methods
consistent with the philosophy of balanced job complexes and just
remuneration, and in a context appropriately influenced by the wills
and desires of consumers.

There is one very large step left to the pareconist internationalist
proposal for an alternative to capitalism. How are the actions of
workers and consumers connected? How do we get the total pro¬
duced by workplaces to match the total consumed collectively by
neighborhoods and other groups as well as privately by individuals?

For that matter, what determines the relative valuation of different
products and choices? How do we decide how many workers will be in
which industry producing how much? What influences whether some
product should be made or not? What guides investments in new
technologies in turn influencing what projects should be undertaken
and which others delayed or rejected? These questions and others too
numerous to mention in this introduction (but dealt with later in this
book) are all matters of allocation.

Existing options for allocation are central planning as used in the old
Soviet Union and competitive markets as used in all capitalist
economies. In central planning a bureaucracy culls information,
formulates instructions, sends these instructions to workers and
consumers, gets feedback, refines the instructions a bit, sends them
again, and receives back obedience. In a market each actor
competitively buys and sells products, resources, and the ability to
perform labor at prices determined by competitive bidding. Each actor
seeks to gain more than those they exchange with.

The problem with each of these modes of connecting actors is that
they impose on the economy pressures that subvert solidarity, equity,
diversity, and self-management.

For example, even without capital ownership, markets favor private
over public benefits and channel personalities in anti-social directions
that diminish and even destroy solidarity. They reward output and
power, not effort and sacrifice. They produce a disempowered class
saddled with rote, obedient labor and an empowered class that
accrues most income and determines economic outcomes. They force
decision-makers to competitively ignore the wider ecological
implications of their choices. Central planning, in contrast, denies self¬
management and produces the same class division and hierarchy as
markets but instead built around the distinction between planners and
those who implement their plans, extending from that foundation
outward to incorporate empowered and disempowered workers more
generally.

In short, both these allocation systems subvert instead of propel the
values we hold dear. So what is our alternative to markets and central
planning?

Suppose in place of top-down central planning and competitive market
exchange, we opt for cooperative, informed decision-making via
structures that ensure actors a say in decisions in proportion as
outcomes affect them and that provide access to accurate valuations
as well as appropriate training and confidence to develop and
communicate preferences—that is, we opt for allocation that fosters
council-centered participatory self-management, remuneration for
effort and sacrifice, balanced job complexes, proper valuations of
collective and ecological impacts, and classlessness.

To these ends, therefore, we advocate participatory planning—a
system in which worker and consumer councils propose their work
activities and consumer preferences in light of true valuations of the
full social benefits and costs of their choices.

The system utilizes cooperative communication of mutually informed
preferences via a variety of simple communicative and organizing
principles and means including, as we will see in coming chapters,
indicative prices, facilitation boards, and rounds of accommodation to
new information—all permitting actors to express their desires and to
mediate and refine them in light of feedback to arrive at choices
consistent with their values.

The internationalist pareconist is in a position to answer "What do you
want?" succinctly and compellingly, in an appetite-whetting
presentation as above, or, of course, in more detail, explaining the
logic of the claims, enriching the picture of daily life relations, and
rebutting possible concerns—as in the rest of this book.

The summary is that workplace and consumer councils, diverse
decision-making procedures that implement proportionate say for
those affected, balanced job complexes, remuneration for effort and
sacrifice, and participatory planning, together constitute core
institutional scaffolding of a comprehensive alternative to capi- talism
and also to centrally planned or market socialism.

The ultimate answer to the claim that "there is no alternative" is to
enact an alternative. In the short term, however, the answer is to offer
a coherent, consistent, viable, economic vision able to generate hope,
provide inspiration, reveal what is possible and valuable, and orient
and democratize our strategies so that they might take us where we
desire to go rather than running in circles or even heading toward
something worse than that which we now endure. But are parecon's
visionary aims rooted in practice undertaken around the world, or only
mental constructs?

Parecon and Visionary Practice

In today's world large movements espousing similar aspirations
struggle worldwide to better the lives of disenfranchised and abused
populations around the globe. Some undertakings pressure elites to
beneficially alter existing institutions. Other efforts seek to create new
institutions to "live the future in the present." Some efforts are small
and local. Some encompass whole geographic regions. If we look at a
selection of visionary practices, we can see many features which have
led to the reasoning presented in this book. Parecon doesn't float in
space, that is, but arises from the aspirations and the insights of a
huge range of activist efforts. Here are a few examples.

Historically almost every instance of working people and consumers
even briefly attaining great control over their own conditions has
incorporated both in locales and in workplaces institutions of direct
organization and democracy. These have been called councils or
assemblies, and given other names as well. Their common feature,
however, has been providing a direct vehicle for people to develop,
refine, express and implement personal and collective agendas. Both
the successes of such endeavors, and also the undeniable fact that
they have been repeatedly destroyed by counter forces, fuel and
inform our advocacy of workplace and consumer councils in parecon
and our efforts to conceive a context in which such councils can thrive
rather than be thrashed.

Throughout the history of struggle against injustice there has also been
great attention to matters of equity and specifically to the idea that
people ought to enjoy life possibilities in a fair and appropriate manner.
We should be able to earn a bit more or less by our choices, of course,
but not for unworthy reasons. In times of upsurge and self-
determination such as in Spain during the Spanish Anarchist struggles
there, or earlier in the Paris Commune, and at many other moments as
well from major national strikes in the West to movements for freedom
in the East and South, seekers of economic justice have realized that
there is something horribly wrong with remunerating those who enjoy
more fulfilling work and who have more say in social life more than
those who do more rote and damaging work and have less say in social
life. Parecon's priority to remunerate only effort and sacrifice arises
from these aspirations and also gives them more precise substance
than they have previously enjoyed.

But what about instances from the present? Is parecon connected to
current exploratory and innovative economic efforts?

Consider collective workplace experiments around the world, including
co-ops, worker-owned plants, and collective workplaces. Workers gain
control over their factories, perhaps buying them rather than having
capitalists close them down entirely, or perhaps originating new
enterprises of their own from scratch. The newly in- charge workers
attempt to incorporate democracy. They try to redefine the division of
labor. They seek narrower income dif- ferentials. But the market
environment in which they operate makes all this horribly difficult. By
their experiences of such difficulties, workers' and consumers' efforts
at creating worker- controlled enterprises and consumer co-ops
provide extensive experience relevant to the definition of parecon. Not
only co-op successes, but also their difficulties—such as tendencies for
old- style job definitions to reimpose widening income differentials and
tendencies for market imposed behaviors to subvert cooperative aims
and values—teach important lessons. Indeed, in my own experience,
the effort to create the radical publishing house South End Press and to
incorporate equity and self-management in its logic and practice
powerfully informed many of the insights that together define
participatory economics, particularly the idea and practice of balanced
job complexes. Likewise, a number of on-going current experiments in
implementing parecon structures continue to inform the vision and its
various features.

On a grander scale, consider the movement for what is called
"solidarity economics” that has advocates in many parts of South
America (and particularly Brazil), Europe, and elsewhere. Its defining
idea is that economic relations should foster solidarity among

participants rather than causing participants to operate against one
another's interests. Not only should economic life not divide and
oppose people, it should not even be neutral on this score but should
generate mutuality and empathy. Advocates of solidarity economics
thus pursue ideas of local worker's control and of allocative exchange
with this norm in mind. Parecon takes their insight that institutions
should propel values we hold dear and extends it in additional
directions. We want a solidarity economy in the same sense as its
advocates do. But we also want a diversity economy, an equity
economy, and a self-managing economy. Indeed we want one
economy that fulfills all these aspirations simultaneously. Parecon thus
arises from, respects, and seeks to provide additional dimensions to
solidarity economics.

Or consider the efforts, some years back, in Australia of labor unions to
influence not only the conditions and wages of their members' work
lives, but also what people produced. They developed the idea of
"Green Bans" which were instances where workers in building trades
would ban certain proposed projects on the grounds they were socially
or environmentally unworthy. Sometimes they would not only ban the
proposed endeavors that capitalists sought to undertake, but would
also undertake alter- native projects of their own design intended to
treat environment and people appropriately. This experience of course
foreshadows and informs both parecon's norms for deciding work and
its apportionment of power to affected constituencies. Parecon extends
the logic of Australia's Green Bans into a full economic vision for all
facets of economic life.

Or consider the efforts in Porto Alegre and other Brazilian cities and in
Kerala and other regions of India to incorporate elements of
participatory democracy into budget decisions for cities and regions.
Indeed, in Brazil this project is named "participative budgeting” and
the idea is to establish means of local direct organization via which
citizens can affect decisions about collective investments regarding
government services such as parks, education, public transport, and
health care. Parecon's participatory planning has the same aspirations
and impetus, but writ larger, encompassing not only public goods but
all goods, and facilitating not only proportionate participation by
consumers, but also by workers.

Indeed, for all the examples noted above and many more as well,
advocates of participatory economics could be expected, once
organized in sufficiently large movements, to pursue similar
struggles—the only difference being the way pareconists would explain
their actions as being part of a process leading to a whole new
economy they would advocate, and perhaps how they would try to

create new infrastructure and consciousness by not only fostering the
immediate aims, but by also empowering participants to win still more
gains in a trajectory leading all the way from capitalism to parecon.
Pareconist workers' control efforts would seek to attain allocation gains
as well, plus new divisions of labor. Pareconist attempts to institute
"participatory budgets" would seek as well to address norms of
remuneration and job allocation and to engender participation not only
in communities regarding public goods, but also in workplaces
regarding all goods. Pareconist union and workers councils would seek
to affect not only the conditions and circumstances of members' jobs,
but also the worthiness of undertaken projects, and would likewise try
to link with consumer movements and spread the efforts to
government sectors and consumer behavior.

In other words, the participatory economic vision put forth in coming
chapters not only springs from and is consistent with past and present
struggles to better people's immediate lives in diverse ways, it also
offers encompassing values and logic to link all these efforts and to
enlarge each consistent with its own best aspirations but also with the
logic and aspirations of others beyond.

And what about the newest and certainly very promising World Social
Forum? Here is a remarkable amalgamation of movements,
constituencies, activists, and projects from all over the globe linked by
an open and experimental attitude, a commitment to participation,
feelings of mutual respect, and attention to diversity and democracy,
all celebrating the sentiment that "another world is possible." In 2002,
at its second incarnation, roughly 50,000 participants began to
enunciate features that that better world might have. The most widely
shared sentiments were rejection of markets and support for self¬
management, rejection of vast differentials in income and support for
equity, rejection of homogenizing commercialism and support for
diversity, rejection of imperial arrogance and support for solidarity, and
rejection of ecological devastation and support for sustainability. No
doubt WSF 2003 will have taken this agenda many steps further by the
time this book appears. And like the WSF, parecon contributes
visionary economic ideas in hopes that political, cultural, kinship,
global, and ecological visionary aims will prove compatible and
mutually supportive.

Participatory economics provides a new economic logic including new
institutions with new guiding norms and implications. But parecon is
also a direct and natural outgrowth of hundreds of years of struggle for
economic justice as well as contemporary efforts with their
accumulated wisdom and lessons. What parecon can contribute to this

heritage and to today's activism will be revealed, one way or the other,
in coming years.

Part I

Values and Institutions

The Devil can quote Shakespeare for his own purpose.

—G.B. Shaw

The civilized have created the wretched, quite coldly and deliberately, and do not
intend to change the status quo; are responsible for their slaughter and enslavement;
rain down bombs on defenseless children whenever and wherever they decide that
their "vital interests" are menaced, and think nothing of torturing a man to death:
these people are not to be taken seriously when they speak of the "sanctity" of

human life, or the "conscience" of the civilized world.

— James Baldwin

The task of developing an economic vision begins with determining
what an economy is, determining what values we aspire to, and
deciding what our attitude is to existing options that we could retain.
While we don't wish to belabor this type of preparatory work, nor can
we rush ahead to vision without any preparation at all. Thus our first
three chapters, constituting part I, clear the way for what follows.

Chapter 1

What Is An Economy?

He tried to read an elementary economics text; it bored him past endurance, it was
like listening to somebody interminably recounting a long and stupid dream. He could

not force himself to understand how banks functioned and so forth, because all the
operations of capitalism were as meaningless to him as the rites of a primitive
religion, as barbaric, as elaborate, and as unnecessary. In a human sacrifice to deity
there might at least be a mistaken and terrible beauty; in the rites of the money¬
changers, where greed, laziness, and envy were assumed to move all men’s acts,

even the terrible became banal.

—Ursula K. Le Guin

In the dictionary an economy is a "system of producing, distributing,
and consuming wealth." Atypical modern economy thus produces
wheat and milk, guitars and garden hoses, medical care and restaurant
meals. This activity needs labor, natural resources, and intermediate
goods in useful ratios. We can produce no houses without wood, wires,
saws, and builders. We can produce no guitars without guitar string,
proper tools, and artisans. Work occurs in factories, hospitals, and on
farms and is done by assemblers, surgeons, bakers, sweepers, nurses,
accountants, and custodians. Depending which type of laborer we are,
we do different tasks, shoulder different responsibilities, receive
different rewards, and make different decisions or follow different
orders.

Sensible production needs its products used. We don't want to
assemble too many or too few items of any kind. We don't want a
hundred guitars at the hardware store or a hundred garden hoses at
the music store, nor do we want to produce more or less of either than
people desire to consume. Allocation is the name for the process and
the institutions that determine who produces how much, what rates it
exchanges for, and where it winds up. From the multitudinous choices
an economy could technically implement, allocation chooses what
actually occurs. Instead of 30 or 140,000 radios, the economy
produces 72,000. Instead of all the radios going to a single Radio
Shack, they disperse appropriately around the society. The same goes
for food, clothes, televisions, toothpaste, rubber, transistors, screws
and nails, and finally for workers themselves. Allocation synchronizes
production and consumption, work and leisure.

Once products arrive where intended, they must be utilized. A garden
hose or guitar is valueless if no one uses it. Individuals and sometimes
families, neighborhoods, counties, or other collective units consume or
otherwise make use of what has been produced and allocated.

In short, production, allocation, and consumption define every
economy. Each aspect provides the reason for and informs the practice
of the other two. It follows, as we will see, that an economy should
produce, allocate, and consume in ways that further people's values,

that meet people's needs, and that do not waste people's energies or
create unfavorable by-products.

Key Economic Dynamics and Institutions

To parsimoniously understand diverse economies, what dynamics
should we highlight? To comprehend main features but avoid minor
details, what aspects should we prioritize?

Ownership Relations

Production occurs in workplaces that utilize hammers and assembly
lines, filing cabinets and computer networks. Private individuals may
own these means of production and distribution. The state may own
them. The whole populace could own an equal share of all means of
production. Or, for that matter, a society could have no concept of
ownership of productive property at all.

In contemporary economies, a few lucky property holders come into
the world to lead lives drenched in continually regenerated opulence.
Millions of working people come into the same world only to wonder
how they will afford another week's subsistence. An economy's
ownership relations dramatically affect people's incomes, economic
responsibilities, and say over economic outcomes. Why are the
propertied born already rounding third base headed for home with no
catcher trying to tag them out? Why are so many others born standing
at home plate, holding a matchstick bat, facing the world's best
pitcher, two strikes against them, resigned to failure?

Allocation Institutions

Allocation exists in all economic systems and the institutions which
accomplish allocation have a profound impact on all economic life.
Allocation institutions include competitive markets, central planning,
and horizontal planning. Within markets buyers and sellers enact
decentralized exchanges with one another. Each pursues personal
interests and the sum of their separate efforts define the economy's
overall activity. With central planning a relatively few planners assess

society's possibilities and announce the amount of each product to
produce and where everything should wind up. Their instructions sum
to society's overall activity. With participatory planning all society's
members assess their own and others' situations and cooperatively
negotiate via their worker and consumer councils their individual and
joint actions. Their deliberations and negotiations sum to society's
undertakings.

Division of Labor

Economies have divisions of labor. Each person does a job that
conveys to him or her different responsibilities and different decision¬
making influence. The extreme possibilities for dividing labor into jobs
are twofold: We can opt for typical hierarchical arrangements that
include highly differential access to empowering and quality of life
work circumstances, or we can opt to provide people with equally
empowering and enjoyable work.

With the hierarchical approach, a person becomes a secretary or a
Company Chairperson, a janitor or a doctor, a manager or an
assembly-line worker, and undertakes responsibilities pegged at a
particular level of skill, knowledge, quality of life impact, and influence
over outcomes. One actor may have no say over any outcomes, while
another has some modest say over a few outcomes, and a third has
immense say over many outcomes.

With the contrasting non-hierarchical approach, we have no secretaries
or CEOs. Each person has a complex of tasks unique in its details but
nonetheless comparable to every other person's regarding its quality
of life and empowerment effects. We each do some rote and some
creative work, some mechanical and some conceptual work. The mix
gives us a fair share of burdensome and fulfilling and/or boring and
empowering tasks. While with the existing corporate division of labor
some workers have a preponderance of more pleasant, uplifting, and
empowering work, and other workers have a preponderance of more
boring, dangerous, and stultifying work, with the proposed balanced
job complexes we would all have jobs embodying an average quality of
life and empowerment effect. We would each do our own different
tasks, but the empowerment and quality of life effects of each of our
jobs would be just like those of everyone else's. The upshot is simple.
Along with the British philosopher and economist Adam Smith (1723-
1790), who penned The Wealth of Nations in 1776, we believe that:

The understandings of the greater part of men are necessarily formed by their
ordinary employments .... the [person] whose life is spent in performing a few simple
operations, of which the effects too are, perhaps, always the same, or very nearly the
same, has no occasion to exert his/her understanding .... and [is] generally [pushed
to] become as stupid and ignorant as it is possible for a human creature to be.

Smith understood that a person would do different things and have
different circumstances at work depending on whether he or she was a
secretary, assembly worker, manager, or owner, and that these
differences would profoundly affect life prospects. And we agree. The
division of labor matters greatly.

Remuneration

The dictionary says "remunerate" means "to compensate for; make
payment for." Remuneration norms and procedures determine what
goods and services people can afford from the whole social output.
Some people are remunerated a pittance for their labors, such as the
man or woman who cooked the flapjacks you ate for breakfast in the
local diner, or who cleaned rooms in the local motel. Some people are
remunerated a huge ransom such as Michael Jordan or a surgeon or
prominent lawyer. Some are remunerated not only for their own labors
but also for the labors of others—sometimes the labors of thousands or
even tens of thousands of others, such as Warren Buffet and his
comrades in capital.

Economic remuneration can occur according to five broad standards.
We can pay people for:

• What each person's property produces, or total output

• What each person herself produces, or personal output

• What each person is strong enough to take, or bargaining
power

• What each person expends and the sacrifices each person
makes, or effort and sacrifice

• What meets each person's needs, regardless of activities

Depending which remuneration norms an economy employs and the
exact mechanics of their implementation, who gets more and who gets
less will differ, as will people's behaviors and thus their evolving
motivations and personalities. Remuneration matters.

Decision-Making

Who or what establishes how work is organized, how long we labor,
what goods are available, and at what rates goods exchange? Where
does power over economic outcomes reside? What logic justifies
existing or alternative distributions of power? What mechanics propel
the enactment of particular power relations? How does the distribution
of economic power affect people's life prospects? Why do some people
rule while others obey and are any other relations possible? Many
approaches exist for economic decision-making:

• Economic decision-making can give the most say to those best
prepared, most informed, and with the most prior experience or
best prior decision-making record.

• Economic decision-making can disperse power among diverse
actors and agents according to various but still differentially
distributed criteria. For example, people who own property might
be given disposition over it because they hold the deed
regardless of any past experience.

• Economic decision-making can accord more or less say to
people depending on whether their jobs give them more or less
control over critical decision-making information.

• Economic decision-making can be determined by a specific
singular norm, such as that one actor gets one vote and majority
rules or a consensus approach.

• Economic decision-making can be guided by a flexible range of
norms so that decisions are made differently depending on each
decision's specific nature and likely implications.

And of course, economic decision-making can combine more than
one of these norms—for example, an economy can have a democratic
or even participatory norm for decision-making among those who own
property or who have elite and empowering jobs, while at the same
time completely excluding from decision-making those who don't own
property and have rote and disempowering jobs.

At any rate, to carry out one or another norm or combination of
decision-making norms, an economy will have associated institutions
and institutional relations which will themselves bear strongly on the
kinds of information each actor has at their disposal, the leverage each
actor has over outcomes, each actor's partici- pation in choices, and
each actor's subservience to the choices other actors make. So of
course the logic and structures of economic decision-making matter.

Economies

If we examine all modern approaches to issues of ownership,
allocation, division of labor, remuneration, and decision-making, we
can group economies usefully into some broad types that flexibly
summarize their essential similarities and properties.

• Capitalism has private ownership, market allocation, corporate
divisions of labor, remuneration for property, power, and output,
and capitalist class domination of decision-making.

• The two socialisms (market and centrally planned), have
public or state ownership, market and/or central planning
allocation, corporate divisions of labor, remuneration for output
and/or power, and ruling coordinator-class domination of
decision-making.

• Bioregionalism, the goal of some environmental activists, has
public ownership, decentralized exchange via face-to-face
allocation, and mostly cooperative divisions of labor, plus a lack
of clear definition of other features (at least in so far as we have
been able to discover).

• Participatory economics as proposed in this book combines
social ownership, participatory planning allocation, council
structure, balanced job complexes, remuneration for effort and
sacrifice, and participatory self-management with no class
differentiation.

Note that any two instances of one type of economy can differ
greatly. Variations can occur in everything from their level of
development, to population, to available resources, to specific
structures (like a special banking system), to the distribution of
power among competing classes or other sectors, to features
that derive from a racist or sexist history or special political
forms. Thus capitalism takes on different features in the US than
it did in the old Sweden, the old South Africa, and currently in
Haiti. Market socialism can also differ in its implementation, as
we have seen in the old Yugoslavia and old Hungary. Centrally
planned socialism is different in Cuba than it was in the old
Soviet Union. Green bioregionalism and participatory economics
are as yet unim- plemented in history, but they can also of
course have different features in different instances.

However, despite the possibility of diverse instances any
instance of any single type of economy will retain the defining
features of that type. To understand the broad properties of
capitalist, market socialist, centrally planned socialist,
bioregionalist, and partici- patory economies will therefore tell us

much about any particular instance of any of these, even without
knowing all that country's secondary features.

Class Structure

Another way to look at types of economies is by how their
institutions broadly divide people into opposed groups. Of course
in any economy there will be differences in the precise
circumstances that any two economic actors have regarding the
economy's institutions. You have one job; I have another. You
work with those tools; I work with these tools. You have such and
such income; I have so and so income. Yet within the spectrum
of endlessly different precise circumstances allotted to each and
every actor, economic institutions may also differentiate people
into relatively large constituencies all of whose members share
certain critical circumstances different from those shared by
other large con- stituencies. Regarding the economy, we call
such different consti- tuencies classes, where a class is a group
of people who by the positions they occupy vis-a-vis production,
allocation, and con- sumption have sufficiently similar
circumstances, material interests, and motivations for us to
usefully talk about their group conditions and group tendencies
as opposed to the group conditions and group tendencies of
other classes who in turn share different circumstances,
interests, and motivations.

Of course not everyone in an economic class has the exact same
situation or inclinations as everyone else in that class.

Bricklayers go to different workplaces than waiters do.
Pharmaceutical capi- talists own different property than
automotive capitalists. Still, the point of class analysis is that the
circumstances and conditions that everyone in a class have in
common are great enough and their implications for people's
behaviors are important enough that it is useful to highlight the
class collectively in trying to understand the overall dynamics of
the economy.

So what divides people into classes? As every economist agrees,
having fundamentally different ownership relations certainly
divides people into different classes. History shows that
ownership dramatically affects one's claims on social product,
one's impact on economic decisions, and one's interests and
motives. Thus, in a capitalist society the conditions shared by all

who own some means of production—whether pharmaceutical,
automotive, or computer companies—give capitalists sufficiently
similar circumstances and motivations for us to usefully talk
about their collective (profit- seeking) behavior. It was owning
some means of production that made the Rockefellers capitalists
and it is the shared (profit- seeking) motives that ownership
induces in capitalists that caused Adam Smith to write that
"people of the same trade seldom meet together, even for
merriment and diversion, but the conversation ends in a
conspiracy against the public, or in some contrivance to raise
prices."

Yet despite its importance, ownership is not the sole possible
basis for class division. Instead, an economy's division of labor or
the role implications of its allocation institutions could also lead
to some people sharing conditions systematically different than
those shared by others, even with the same ownership situation.

In capitalism, virtually every serious analyst calls those who own
the means of production "capitalists” and those who own nothing
but their ability to work and who must sell that ability for a wage
paid to them for doing a rote and subservient job, "workers." But
in going beyond property as a basis for class division, we can
also identify a "coordinator class" composed of those who
receive a wage for their labors but who, unlike workers, do jobs
that have considerable influence over their own and other
people's economic situations and who retain their more
empowering jobs largely due to monopolizing certain skills and
knowledge. And we can note that the class of workers such as
assemblers, waiters, truckers, and janitors, and the class of
coordinators such as managers, doctors, lawyers, and engineers,
regard one another with opposed interests. And that each also
opposes capitalists, though in different ways.

So, What Is An Economy?

We have argued that:

1 An economy is a set of institutions concerned with produc- tion,
allocation, and consumption, and including identifiable divisions of
labor, norms of remuneration, methods of allocation, and means of
decision-making.

2 Key features are public or private ownership relations; hierarchical
or balanced divisions of labor; markets, central, or horizontal planning;
and elite or democratic decision- making; each of which can
differentiate economic actors into classes whose circumstances give
each class shared material interests, assets, and behaviors, opposed to
those of other classes.

3 Different broad types of economies include capitalism, market
socialism, centrally planned socialism, bioregion- alism, and what we
call participatory economics. While specific instances of each type can
have widely varying development, population, political, family, cultural,
and other institutions, among other variable characteristics, within any
one economic type all instances will at least share the same broad
centrally defining economic insti- tutions and derivative class
structure.

4 To study an economic type one should determine its core
component institutions and their impact on divisions of labor, modes of
remuneration, and distribution of influence over outcomes, and on how
all these affect different economic classes.

5 And finally, to judge a type of economy one should ask how its
features and aspects impact on human outcomes and prospects and
whether we like the impacts or not.

Chapter 2

Economic Values

There is nothing so absurd that it has not been said by philosophers.

—Cicero

True compassion is more than flinging a coin at a beggar;
it comes to see that an edifice that produces beggars needs restructuring.

— Martin Luther King Jr.

We know that an economy needs to produce, allocate, and consume as
people wish. But whose wishes matter? What opportunities to express
their wishes should people have? How do people produce, allocate, and

consume, and with what impact on their life prospects? What are our
preferred values regarding economic outcomes and how do particular
economic institutions further or inhibit them?

When examining and evaluating economic systems, there are four
main questions about values we must address:

1 Equity: How much should people get and why?

2 Self-management: What kind of say over their conditions should
people have?

3 Diversity: Should paths to fulfillment be diversified or narrowed?

4 Solidarity: Should people cooperate or compete?

Our first step in envisioning a new economy is to address these four
areas of concern.

Equity

Nearly everyone favors "equity." But controversy arises because
different people mean different things by the term. We want fair
income and fair situations, but fair in what way?

Equity 1: Income

Regarding income, four distributive norms summarize available options
for how people should be compensated for economic activity:

• Norm 1: Remunerate according to the contribution of each
person's physical and human assets.

• Norm 2: Remunerate according to the contribution of each
person's human assets only.

• Norm 3: Remunerate according to each person's effort or
personal sacrifice.

• Norm 4: Remunerate according to each person's need.

Of course, historically the most frequently actualized norm is that
people should get what they are strong enough to take, but virtually no

one morally advocates brute force bargaining power as our preferred
criterion for payment. No one thinks this common approach is ethically
superior. No one thinks it is efficient. The idea that society should
enrich the thug for being thuggish, though it is typically the rule that
markets and many other systems impose, is no one's stated ideal. For
that reason it doesn't require treatment in a book about economic
vision. So, paying attention only to the four norms that people do
advocate, let's first consider norm one.

The rationale for rewarding people for the contribution that their
private capital makes to output is that people should get out of an
economy what they and their productive possessions contribute. If we
think of economic goods and services as a giant pot of stew, the idea is
that individuals contribute to how plentiful and rich the stew will be by
their labor and by the non-human productive assets they bring to the
kitchen. If my labor and productive assets make the stew bigger or
richer than your labor and productive assets make it, then according to
norm one, it is only fair that I eat more or more delectable morsels
than you eat. Since I brought greater assets to the kitchen, I deserve
greater reward. You own a hoe and I own a tractor. This makes me
more productive than you and enables me to make a greater
contribution to society's total food output. It is only fair, therefore, that
I be better remunerated than you.

Though this rationale has intuitive appeal to many, norm one's
advocates have the "Rockefeller's grandson problem" to deal with.
According to norm one, the grandson of a Rockefeller should eat 1,000
times as much stew as a highly trained, highly productive, hard¬
working daughter of a pauper. And this is warranted, says norm one,
even if Rockefeller's grandson doesn't work a day in his life and the
pauper's daughter works for fifty years providing services of great
benefit to others. The grandson has inherited property that "works” for
him since he "brings it to the kitchen" and by norm one we credit the
contribution of productive property to its owners. Bringing a tractor or
100 acres of Mississippi bottom land to the economy increases the size
and quality of the stew we can make just as surely as having another
person to dig or peel potatoes does—only more so. Therefore, if we
inherit a tractor or land, then along with this inheritance comes a
stream of income that we need do nothing whatever to "earn." On the
other hand, the fact that we have done nothing whatever to earn it
makes it self-evident that we don't deserve it morally due to some
meritorious action on our part. There must be some other explanation
than our being "morally deserving" for why we ought to have it.

And, indeed, a second line of defense for norm one is based on a vision
of "free and independent" people, each with their own property, who, it

is argued, would refuse to voluntarily enter a social contract on any
other terms than benefiting from that property's output. We need norm
one, in this view, if these people are to freely participate in the
economy. But while those who have a great deal of productive
property would have a good reason to hold out for a social contract
rewarding them for their property, why wouldn't those who have little
or no property have a good reason to hold out for a different
arrangement that doesn't penalize them for not owning property? And
if this is true, then how come those with property get the norm they
want, and those without property do not?

The historical difference is that those with property could do quite well
for themselves (including buying enforcement of their wills via
legislation) while waiting for agreements to be reached, whereas those
without property could not avoid catastrophe if they had to wait long
for an agreement. Requiring unanimity of all parties drives the bargain
to favor the propertied. The unemployed eventually have to give in and
seek work even under the conditions that profits will go entirely to
owners. To do otherwise leaves them destitute. But that means norm
one is established not due to moral desirability, but because of an
unfair bargaining situation in which some are better able than others to
tolerate failure to reach an equitable agreement (and therefore better
able to coerce submission and defend their holdings). Thus, the social
contract rationale for earning on property loses all ethical force and
has its weight only due to contingent, unbalanced circumstances.

This analysis is nothing new, by the way, though it isn't meant to be
publicly discussed by those without property. Consider, for example,
Adam Smith's pithy formulation that "It is only under the shelter of the
civil magistrate that the owner of valuable property ... can sleep a
single night in security.” Or consider this old anonymous aphorism:

"The Law locks up the hapless felon who steals the goose from off the
common, but lets the greater felon loose who steals the common from
the goose."

A related insight is that unless those who have more productive
property acquired it through personal sacrifice, the income they
receive from owning the property is unjustifiable on equity grounds.
Basing income on private property is not equitable and must be
rejected if we determine that those who own more productive property
did not come to it through greater personal sacrifice. Pursuing this line
of assessment in tune with the views of the advocates of norm one, we
must now ask how property is acquired?

Acquisition of productive property through inheritance obviously
entails no sacrifice by the heir. Consequently, we deny the would-be

heir nothing that she has a moral claim to if we prohibit inheritance of
productive property. But what about the rights of members of the older
generation who wish to bequeath productive property to their
progeny? Suppose (against all odds) that those who wish to make
bequests came by their productive property in a manner consistent
with a worthy conception of economic justice. That is, suppose they
sacrificed more than others by working longer or harder, and rather
than eating prodigious portions of caviar in the twilight of their lives,
they prefer to pass on their hard-earned productive assets to their
children or grandchildren. To deny them the right to do so would seem
an unwarranted violation of their personal freedom to dispose of their
legitimate rights to economic benefits as they wish. It certainly does
interfere with this right.

But what about the right of members of the younger generation to
equal economic opportunities? If we permit inheritance of productive
assets, some young people will start out with advantages and others
will be debited—all due to no failures of their own—a disparity that
could grow from generation to generation. If members of an older
generation when exercising their freedom of consumption have the
right to pass along productive property, then they will have created for
a younger generation unequal economic opportunities that violate the
rights of the latter. On the other hand, if members of the younger
generation are to be protected from this inequitable result, their elders
must be precluded from dispersing their assets as they choose—a
result that also seems unfair.

What do we choose? The right to bequeath means of production should
be denied because the right for all generations to equal economic
opportunity far outweighs the right of some of the members of one
generation to bequeath income-generating wealth to their offspring.
While some freedom of consumption for the older generation to
acquire property and pass it on is certainly sacrificed by outlawing the
inheritance of productive property, doing so is necessary to protect a
more fundamental freedom of the younger generation to equal
economic opportunities. More generally, con- freedoms of this sort are
common in economics and other aspects of society as well, and rather
than settling such conflicts by abstractly awarding a property right to
one party or the other, thereby elevating the notion of property as the
arbiter of difference, the goal should be to give every actor decision¬
making input in proportion to the degree that person is affected by the
outcome, thereby elevating true democracy as the arbiter of
difference. In other words, economic self-management—defined as
having decision-making influence in proportion to the degree that one
is affected—is a far superior norm than that of economic freedom
based on the right to do whatever one chooses with one's property.

In these terms, since the younger generation would be much more
seriously affected by unequal economic opportunities than the older
generation would be affected by limiting their freedom to pass on
productive property, it is justifiable to limit inheritance rights. While the
conflict between freedom of consumption for an older generation to
bequeath their property and the right to an equal economic
opportunity of a younger generation is only one of many conflicting
freedoms in capitalist economies, it is a particularly important one.
Awarding the property right in favor of inheritance is a particularly
egregious violation of the principle of economic self-management since
it permits those who are little affected (the ones making bequests) to
greatly affect the lives of many others. These others, as a result, must
start their economic lives with serious handicaps relative to a few of
their privileged peers.

A second way—beyond actually sweating for it—that people in
capitalism acquire more productive property than others, is through
good luck. Working or investing in a rising or declining company or
industry involves good or bad luck. Pursuing some line of industry and
benefiting from ancillary activities of others or from changing global or
domestic boom or bust dynamics involves good luck. Distributions of
productive property that result from luck hardly reward sacrifices on
people's part. There is therefore no moral justification on their behalf,
obviously.

A third way that people come to have more productive property is
through unfair advantages such as differences in circumstances and
human characteristics. For example, arbitrary factors could allow you
to accumulate more productive assets than I because you have
information that I do not have, or you operate in a town or country
enjoying advantages that my locale doesn't enjoy. Arbitrary differ¬
ences in human characteristics could mean that you have greater
innate intelligence, strength, or dexterity than I do, all through no fault
of mine and due to no greater effort or sacrifice on your part, and
these could lead to your acquiring more property. And though these
differences may seem unlikely to be too large, even slight initial
inequalities in ownership of productive property will grow aggres¬
sively more unequal in economies where owners are paid for the
contributions of their property. The initial advantage enlarges itself,
providing the means to acquire still greater property. If the initial
difference is unjust, still greater differences that result from ensuing
accumulation are unjust as well.

But what if some people accumulate more because they work longer or
harder than others? Or, what if some people consume less to
accumulate more productive property? Most who argue for norm one

as equitable would have us believe that this is how inequalities in the
ownership of productive property usually arise. And, indeed, if
someone accumulated more productive property through more work or
less consumption in the past, then greater consumption (or leisure)
commensurate with the greater past sacrifice is warranted. But this
conclusion is a direct application of norm three—to each according to
his or her effort or sacrifice—as long as "commensurate" compensation
is the quantity required to compensate for greater past sacrifices,
thereby making everyone's burdens and benefits fair over time. It does
not justify norm one, with its implications of remunerating for property
even when it exceeds what effort and sacrifice warrant.

Most political economists accept that in capitalist economies the
differences in ownership of productive property that accumulate within
a single generation due to unequal sacrifices are minuscule compared
to the differences in wealth that develop due to inheritance, luck,
unfair advantage, and profit-making. That was what Proudhon meant
when he coined the phrase "property is theft." All evidence about the
origins of differential wealth at the end of the twentieth century
support the opinion Edward Bellamy voiced (in 1888) in his famous
book Looking Backward :

You may set it down as a rule that the rich, the possessors of great wealth, had no
moral right to it as based upon desert, for either their fortunes belonged to the class
of inherited wealth, or else, when accumulated in a lifetime, necessarily represented
chiefly the product of others, more or less forcibly or fraudulently obtained.

A turn of the twenty-first century TV ad for the brokerage house
Salomon, Smith, & Barney provides a delicious example of ethical
doublespeak about property income. A man of obvious taste devoutly
informs us that the brokers at Salomon, Smith & Barney believe in
"making money the old-fashioned way, earning it." What he means, of
course, is that brokers discourage clients from the temptation of high-
gain, high-risk strategies, and recommend instead expanding wealth
more slowly but with greater certainty— precisely without earning a
penny of it. As Ricardo noted: "There is no way of keeping profits up
but by keeping wages down.” And in the typically pithy words of
Groucho Marx: "The secret of success is honesty and fair dealing. If
you can fake those, you've got it made."

Norm two for remuneration is less straightforward to assess than norm
one: Why not reward each according to the value of the contribution of
only our human capital, that is, of only what we ourselves through our
own efforts bring to the kitchen? While supporters of norm two
generally agree with the case made above that property income is
unjustifiable, they hold that we all have a right to the "fruits of our own
labor." Their rationale for this is at first review quite compelling. If my

labor contributes more to the social endeavor, it is only right that I
should receive more. Not only am I not exploiting others if I get more,
but since I put the extra amount in the pot myself, they would be
exploiting me by paying me less than the value of my personal
contribution.

But the obviousness of the claim is a function of its familiarity and not
of hard thinking about it. Careful thought shows we must reject norm
two—rewarding personal output—for the same basic reasons we reject
norm one—rewarding ownership of means of production.

Economists define the value of the contribution of any input (whether
labor or machines or some resources) as the "marginal revenue
product" of that input. If we add one more unit of the input in question
to all of the other inputs currently used in a production process, how
much would the value of output increase? That amount is the marginal
revenue product. But this means the marginal productivity, or the
contribution any input makes, depends as much on the quantity of that
input available and on the quantity and quality of complementary
inputs, as on any intrinsic quality of the input itself. In other words, the
amount that my extra hour of labor can add to output depends on how
many prior hours I work, and also on how many other hours others are
putting in, and on the quality of their contributions, and on the tools we
all use, and on the items we produce and their attributes, and so on.
This fact alone undermines the moral imperative behind any
"contribution based" norm, such as both norm two and norm one.

To reward differences in the value of personal contributions as norm
two warrants is to reward differences due to circumstantial and
personal factors beyond any individual's control. When young people
flock to the profession that you have labored in for twenty years, your
marginal revenue product declines although you may work as hard as
ever. When your employer fails to replace machines that other
employers upgrade, your marginal productivity suffers even despite
there being no decrease in your efforts.

Suppose we set aside or somehow account for the fact that the
marginal productivity of different kinds of labor depends on the
number of other people in each labor category and on the quantity and
quality of non-labor inputs available as well as on technological
knowledge. The "genetic lottery" constitutes another circumstance
largely outside an individual's control that can greatly influence how
valuable one's personal contribution will be. No amount of eating and
weightlifting will give me a 6-foot-9-inch frame with 300 pounds of
muscle so that I can "earn" the salary of a professional football player
50 times greater than the salary I "earn" now. The noted English

economist Joan Robinson (1903-1983) pointed out long ago that
however "productive" a machine or piece of land may be, that doesn't
constitute a moral argument for paying anything to its owner. And we
need only extend this insight to individual human characteristics to
realize that however productive an IQ of 170 or a 300-pound physique
may be, that doesn't mean the owner of this trait deserves more
income than someone less productively endowed who works as hard
and sacrifices as much.

Luck in external circumstance and in the genetic lottery are no better
basis for remuneration than luck in the property inheritance lottery—
which implies that as a conception of equity, norm two suffers from the
same flaw as norm one. If a person has the fine fortune to have genes
that give her an advantage for producing things of merit, or if she is
lucky as regards her field of work, there is no reason on top of this
good luck to provide her with an exorbitant income as well.

In defense of norm two, its advocates frequently claim that while talent
may not morally deserve reward, employing talents requires training,
and therein lies the sacrifice that merits a reward. Doctors' salaries are
deemed compensation not for some innate capability the doctor has,
but for the extra education they endure. But longer training does not
necessarily entail greater personal sacrifice. It is important not to
confuse the cost of someone's training—which consists mostly of the
time and energy of teachers who impart the training and of scarce
social resources like books, computers, libraries, and classrooms—with
personal sacrifice by the trainee. If teachers and educational facilities
are paid for as a public and not private expense—that is, if we have a
universal public education system—then the personal sacrifice the
student makes consists only of his or her discomfort during the time
spent in school.

Moreover, even the personal suffering that one endures as a student
must be properly compared. While many educational programs are
less personally enjoyable than time spent in leisure, the relevant
comparison is with the discomfort that others experience who are
working at paid jobs instead of going to school. If our criterion for extra
remuneration is enduring greater personal sacrifice than others, then
logic requires that we compare the medical student's discomfort to
whatever level of discomfort others are experiencing who work while
the medical student is in school.

In short, would you rather be in medical school or slinging hash? Only if
schooling is more disagreeable than working does it constitute a
greater sacrifice than others make and thereby deserve greater

reward, and the additional reward it would then deserve would be
commensurate to that difference, but not more.

So to the extent that education is born at public rather than private
expense, and that the personal discomfort of schooling is no greater
than the discomfort that would be incurred by working instead during
the same time frame, extra schooling merits no extra compensation on
moral grounds. And if one pays for one's education, then that marks
the reward warranted, and no more. And if one's education is onerous
and demanding compared to working, that difference marks the extra
compensation warranted, and no more.

The problem with the "I had to endure school so long” justification of
norm two is the "doctor versus garbage collector problem." How can it
be fair to pay a brain surgeon, even in the unlikely event he puts in
longer hours than most other workers, ten times more than a garbage
collector who works under miserable conditions forty or fifty hours a
week? Even if medical school is costly, and in fact even if it is more
debilitating and harder than collecting garbage during the same time
(which is a ridiculous claim), surely it would warrant far less than a
lifetime of much higher pay to compensate the doctor for that
temporary sacrifice, particularly since the subsequent job—brain
surgery—has exceptional social and moral rewards of its own. The
moral basis of norm two collapses.

So what about norm three—remunerate according to each person's
effort or personal sacrifice? Whereas differences in contributions from
people's labor will derive from differences in circumstance, talent,
training, luck, and effort, of all these factors people control only their
effort. To reward and punish people for things they cannot control
violates the same basic tenet of social justice that says it is unfair to
pay differently according to race or sex, for example. By "effort" we
simply mean personal sacrifice or inconvenience incurred in
performing one's economic duties. Of course effort can be longer
hours, less pleasant work, or more intense, dangerous, or unhealthy
work. Or, it may consist of undergoing training that is less gratifying
than the training experience of others, or less pleasant than the time
others spend working. The underlying rationale for norm three is that
people should eat from the stew pot according to the sacrifices they
made to cook it. According to norm three no consideration other than
differential sacrifice in useful production can justify one able-bodied
person eating more or better stew than another.

Even for those who reject contribution-based theories of economic
justice like norms one and two, there is still a problem with norm three:
the "car crash problem." Suppose someone has made average

sacrifices for 15 years, and consumed an average amount. She is hit
by a car. Medical treatment for crash victims can cost a fortune. If we
limit people's consumption to the level warranted by the effort they
expend, we would have to deny hurt or sick people humane treatment
(and/or income while they can't work).

Of course this is where another norm comes in, norm four: payment
according to need. But as attractive as norm four is, it is a norm in a
different category from the other three. It is not really a candidate for a
definition of economic justice. Instead, it expresses a value beyond
equity or justice that we aspire to and implement when possible and
desirable. It is one thing for an economy to be equitable, fair, and just.
It is another thing for an economy to be compassionate. A just
economy is not the last word in morally desirable economics. Besides
striving for economic justice, we desire compassion as well. Thus we
have our equity value, norm three, and beyond economic justice, we
have our compassion, to be applied via norm four where appropriate
such as in cases of illness, catastrophe, incapacity, and so on. And
those are our aspirations for income.

Of course we know that it won't be worthwhile to attain equity of
income and even compassionate humanity about income, if in doing so
the total productive output plummets or other nasty side effects cost
us considerably in our broader lives. But that is a matter that we
address when we assess whether we can institutionally implement our
norms for economic reward in ways consistent with other values we
hold dear. We shall investigate that as we proceed. First, there is
another dimension of equity to consider.

Equity 2: Circumstances

Why should one person have an economic condition at work that is
fulfilling and pleasant, and another have a condition that is debilitating
and depressing? What justification can there be for this difference? On
what moral grounds should Anthony enjoy better economic
circumstances than Arundhati?

Arguments regarding income carry over virtually without alter- ation.
Surely it cannot be owning property that justifies Anthony getting
better work conditions and circumstances than Arundhati does. Nor
can it be due to some innate quality, nor to training. If Arundhati
actually suffers a worse work situation than Anthony, we can certainly
offset it by giving Arundhati a larger income to make the income/work
package equal for her and Anthony.

The point is, in thinking about equitable economic conditions, we have
to think in terms of not just equitable remuneration but also equitable
circumstances. The only real justification for differential allocation of
circumstances is if this benefits output, and in turn everyone. But
surely, even if this were the case one would then offset the situation
for the party who was suffering worse conditions with a higher income,
while the party benefiting from better circumstances would receive a
lower income.

This attitude toward making circumstances equitable is already
inherent in the discussion of income and in the choice to remunerate
according to effort and sacrifice, but it is worth pointing out on its own
account for clarity's sake. We will return later to the implications of
equilibrating not only the quality of work in different jobs, but also how
different jobs empower workers. But for now we consider the next area
of concern about guiding values.

Self-Management

The fourth area of great concern we set forth is power and
participation: To what extent should economic agents affect outcomes?
As with remuneration, here too we have a particular controversial
value we favor, so we need to make a careful case on its behalf. What
should be our norm for the influence any actor should have over
economic outcomes? Three primary options exist.

1 Vest most power in a few actors and leave the rest very little say
over decisions that affect them.

2 Distribute power more equally, with each actor always having one
vote in a majority-rules process.

3 Vary the way power is distributed depending on the relation of
each actor to specific decisions. Sometimes you get more say,
sometimes I get more say. The issue then becomes defining the
criteria that determine how much say any of us have in one decision as
compared to another.

The first option—giving the most say to a few people—is generally and
rightly labeled authoritarian because it gives to the few
disproportionate power over the many. In the political realm we call it
dictatorship or oligarchy and generally reject it as being incompatible
with respecting the rights of all humans. But if it is wrong to have a
political elite decide our political conditions because we should each

have some say in this, then surely it is also wrong for an economic elite
to decide our economic conditions—on the same grounds that we
should each have some say in this.

The second option, one-person-one-vote majority rule in all things, is
often called democracy. But consider me as I was typing this page.
Should you have had a vote on what computer I used, or on whether I
turned the light on at my desk, or on whether I had my window open?
No, I should make all those decisions myself, authoritatively, just as
you should decide when and whether to turn to the next page of this
book or to instead set this book aside and read something more
entertaining, or to take a bath, for that matter.

It doesn't take but a minute of unconstrained thinking to realize that
praising one-person-one-vote decision-making says little about a
general norm for decision-making. To invoke majority rule universally
ignores that out of the wide diversity of decisions that arise in social
interactions and economic life only a relative few are properly handled
by giving everyone a single vote and tallying the results. Should the
workers at GM and Boeing and those at the corner grocery have an
equal vote on whether workers at Ford take a lunch break at twelve
noon or a half hour later? Obviously not.

What emerges is that to have a sensible decision-making norm
requires that actors have a range of decision-making influence, from
very little to overwhelming, depending on how greatly decisions in turn
affect them. But how do we determine where on this broad range one's
power should fall for any particular decision?

Suppose that you have a desk in a workplace. You are deciding
whether to place a picture of your child on that desk. How much say
should you have? Or suppose that instead of a picture of your child,
you want to place a stereo there and play it loudly in the vicinity of
your workmates. How much say should you have about that?

There is probably no one who wouldn't answer that as to the picture
you should have full and complete say, but as to the stereo you ought
to have limited say, depending on who else would hear the music and
therefore be affected by your choice. And suppose we then ask how
much say other folks should have? The answer, obviously, depends on
the extent to which the decision would affect them.

The norm we favor is thus that to the extent that we can arrange it,
each actor in the economy should influence economic outcomes in
proportion to how those outcomes affect him or her. Our say in
decisions should reflect how much they affect us. That's the only norm

that treats all actors with equal respect and that accords all actors the
same claims on power without reducing decision-making to a
mechanical process divorced from the logic of its implications. If an
alternative norm is different, then it must be saying that some people
should sometimes have disproportionately more say and other people
should sometimes have disproportionately less say in decisions that
affect them. What moral justification can there be for regarding
different humans with such disparity?

But is there a plausible pragmatic argument against our norm? Of
course there is. Take a very young child. Do we think that this child
ought to have overwhelming influence on decisions that affect her
overwhelmingly? Or do we say that due to the child's incapacity to
understand and make judgments, a parent must make decisions for
her? We all therefore easily recognize that one reason for abrogating
the norm that each actor should influence decisions in proportion to
how the outcomes of those decisions will likely affect him or her is that
someone may be incapable of doing this in his or her own interest and
in light of his or her own needs and with an effective understanding of
the dynamics involved. As to whether this paternalistic caveat has any
bearing on economic evaluations, we would like to wait for specific
cases in later chapters. The point here is that if we can describe
institutions that allow people to have input into decision-making in
proportion to how much they are affected while maintaining the quality
of economic functions, then we will have attained a desirable result in
everyone's view.

Diversity

For reasons of vicarious benefit as when we enjoy other people doing
things we can't do or don't have time to do, and also as a hedge
against placing all our eggs in one wrong basket, everyone easily
agrees that diverse and varied outcomes are generally better than
homogenous ones. We don't want to create a massive investment
project ruling out all other possibilities without exploring and even
being prepared to create parallel endeavors in case we were in error
about our priority preference or in case there are diverse preferences
not met by the preferred option. We don't want to regiment life in any
respect, cultural or economic.

People vary, on the one hand, and thus benefit from varied options.
And on the other hand, without diversity there is a huge probability we
will make egregious mistakes, traveling down a single path that turns
out to be inferior to others that we failed to explore. Thus, assuming

equal attention to other values, surely one economy will excel above
another if in fulfilling its functions it also promotes and supports
greater rather than lesser diversity. Homogenization of tastes, jobs, life
conditions, material outcomes, and thought patterns is not a virtue.

Solidarity

We endorse solidarity. It is better if people get along with one another
than if they violate one another. In two economies that equally respect
and fulfill all other values we favor, would anyone deny that attaining
more solidarity is better than attaining less?

To care about one another's well-being as fellow humans is surely
good. To view one another as objects to exploit or with other hostile
intentions is surely bad. No one who is at all progressive would
disagree. So clearly an economy that enhances solidarity by entwining
people's interests is better than an economy that yields precisely the
same outputs and allocations, but creates hostility by pitting actors
against one another.

Efficiency

Of course, in addition to solidarity, diversity, equity, and participatory
self-management, there is one more evaluative norm we must keep in
mind. It will not do, for example, to have economic institutions that
promote all our economic values but do not get the economic job done.
It will not do, that is, to have an economy that does not meet
expressed needs, or that does so to a limited degree though delivering
fewer or less desirable outputs than would have been possible with
more efficient operations.

But that said, having these five values—solidarity, diversity, equity,
and participatory self-management, plus meeting-expressed needs
without waste—gets us a long way toward being able to judge
economies. If an economy obstructs one or more of these values, to
that degree, we do not like it. On the other hand, if an economy
furthers these preferred values, that's very good, though we must still
look further to see if there are any offsetting problems.

In other words, the values enunciated in this chapter take us not quite
all the way to a full resolution regarding evaluating economies. They
can help us pinpoint severe failings that should cause us to label

economies inadequate. But though these values mean to be
encompassing and critically important so that not furthering them is a
damning criticism, there are many other values—such as privacy,
personal freedom, artistic fulfillment, or even something specific like
the right to employ others for personal gain—which might (or might
not) also merit attention. And we can imagine that our favored values
could come into conflict with one or more of these other values in
certain contexts—for example, more solidarity might reduce privacy, or
more self-management might reduce quality of outputs—in which case
someone could argue that one of our values should be somewhat
sacrificed to attain conflicting desirable ends.

The only effective way to assess these complicating possibilities is with
more specificity. We must judge the merits of specific economic
institutions or whole economic types. Our judgments about economic
components and whole economies will reveal the particular valuations
that we favor, and readers can decide for themselves whether our
conclusions are worthy or not. To start, we will utilize as guiding values
solidarity, diversity, equity, self-management, and efficiently meeting
needs and developing capacities.

3

Judging Economies

All who are not lunatics are agreed about certain things. That it is better to be alive
than dead, better to be adequately fed than starved, better to be free than a slave.
Many people desire those things only for themselves and their friends; they are quite
content that their enemies should suffer. These people can be refuted by science:
Humankind has become so much one family that we cannot insure our own
prosperity except by insuring that of everyone else. If you wish to be happy yourself,

you must resign yourself to seeing others also happy.

— Bertrand Russell

[Capitalism] is not a success. It is not intelligent, it is not beautiful, it is not just, it is
not virtuous—and it doesn’t deliver the goods. In short, we dislike it, and we are
beginning to despise it. But when we wonder what to put in its place, we are

extremely perplexed.
— John Maynard Keynes

Four economic institutions are commonplace in currently favored
economic systems: private ownership of the means of production,
hierarchical corporate divisions of labor, central planning, and markets.

It makes sense to assess each in their own right. Having done so,
evaluating types of economies will be easy.

Private Ownership

Private ownership of the means of production exists when private
individuals own the buildings, equipment, tools, technologies, land,
and/or resources with which we produce goods and services. Private
ownership is relevant to how we evaluate an economy in three senses.
By virtue of owning particular items owners decide how they are used,
largely rule over their disposition, and accrue income from putting
those items to work and claiming all revenues above and beyond
costs.

The implications of employing private property for remuneration and
decision-making are therefore pretty straightforward. Private property
imposes what we earlier called norm one (rewarding property) as a
dominant component of income distribution. Like- wise, private
property affords owners disproportionate say over decisions that
involve the disposition of their property even if other people are
greatly affected. Thus, when a capitalist employing many people
decides to move a firm to a new locale, the impact can devastate the
employees fired or the town left behind, yet neither the discarded
employees nor the gutted town have significant say in the decision.
Likewise, in having dominant say over how a workplace is organized
and utilized the owner has vastly dis- proportionate influence over
decisions affecting how workers spend their days.

The implications of private ownership for solidarity are largely
derivative. By separating those who own means of production from
those who don't, private property generates opposition. The owner
tries to extract maximum labor from the workforce as cheaply as
possible to generate as much saleable product at as little cost as
possible, thereby maximizing profits while also working to maintain the
conditions that allow owners to appropriate profits. The non-owner
(worker) tries to increase her wage as much as possible and to have as
desirable a work day as possible, while increasing her power to
demand more and better her economic life. The worker therefore
prefers to work less than the owner desires, under better conditions,
and with more pay. The opposed motivations of workers and owners
create conflict that obstruct solidarity.

Diversity is modestly affected by private ownership. By dividing people
into owners and workers, private ownership creates a great difference

between the two classes but also creates homogenizing pressure
inside those classes.

Corporate Divisions of Labor

Producing any particular product or service requires various tasks. A
hierarchical division of labor is one that apportions these various tasks
into separate jobs graded hierarchically relative to one another. Some
sets of tasks combine into jobs that have more quality of life and/or
empowerment effects. Other sets of tasks combine together into jobs
that have less of those same attributes. The jobs therefore form a
hierarchy with respect to quality of life effects and the power that jobs
accord to workers, as well as associated remuneration and status. This
hierarchy marks the difference between being an all-purpose gopher, a
custodian, an assembler, a foreman, a manager, an engineer, a vice
president, or a CEO.

In any workplace, we can examine the pleasure or pain a job entails,
the tensions it imposes, its sociality or isolation, its danger or sense of
accomplishment, the pay it warrants, and the implications it has for
empowering people vis-a-vis their own situations or the situations of
others. If we find that some jobs have many more of the preferred
features and some many fewer, then the workplace has what we call a
corporate division of labor. On the other hand, if we can't line up an
economy's jobs in a pyramid of their desirability or empowerment
implications, then the workplace doesn't have a corporate division of
labor.

So how do we judge the corporate division of labor as a means to
getting economic functions accomplished? As with all institutions, we
must examine the implications of this choice for solidarity, diversity,
equity, and self-management.

We will start with the most obvious aspect: if you have a corporate
division of labor in which a few workers have excellent conditions and
empowering circumstances, many fall well below that, and most
workers have essentially no power at all, you will obviously not see all
actors influencing decisions in proportion to the degree they are
affected by them. For one thing, a corporate division of labor nearly
always entails that actors have differential voting say over outcomes.
Those at the top generally have more "votes" than those at the bottom
(in fact, those at the top most often have all the formal voting rights
with none for those at the bottom). But even if everyone has one vote
in every major decision regardless of their job, nonetheless, with a

corporate division of labor, each person's specific circumstances will
empower her or him differently. This will in turn ensure that despite
everyone having equal formal say, for want of information, time, skills,
and disposition, those with less empowering work will be less able to
arrive at or manifest their views and those enjoying jobs that convey
more information, confidence, and decision-making skills will dominate
debate and choice. Formal democracy doesn't guarantee real
democracy. The wills of empowered workers trump the wills of
disempowered workers because the empowered workers set agendas
and easily override uninformed preferences, and most likely
monopolize votes as well. The wills of disempowered workers are
unlikely even to be heard, much less implemented.

To see how this follows from dividing labor as indicated, imagine that
overnight it is decided to hold formally democratic votes on various
policies in a typical corporate workplace. The jobs in that workplace,
however, are to remain as we currently know them. The managers,
CEOs, engineers, custodians, shipping clerks, and assembly workers
are all going to vote on large policies that provide the overarching
norms for their daily activities—but in their daily activity they are going
to do just as they have done before, with the same autonomy or lack of
it, the same empowering work or lack of it, and so on. Despite the one-
person-one-vote majority rules approach to the biggest decisions, we
can predict that in the process of developing options to vote on and
then arguing on their behalf, only the views of the employees with
access to knowledge of the workplace and with relevant decision¬
making skills will come to the fore. They will set agendas. They will
pontificate ponderously or compellingly, alone. Their desires will
overwhelmingly dominate proposals, discussion, debate, and choice.
The hierarchical distribution of empowering circumstances conferring
to only a few actors informed opinions and decision-making
information, skills, and confidence, will obstruct participation of all
actors in voting. Corporate divisions of labor will ensure that a few
would give orders and most obey, and these are not conditions
conducive to all participating equally. With corporate organization, that
is, formal democracy becomes not just a facade on top of unequal
conception and debate, but an annoyance that wastes time and
energy. If you are low in the hierarchy, why should you attend
meetings and vote when your attendance and vote have little to no
impact since real decisions are largely made before you ever arrive on
the scene? Why should those who do impact outcomes put up with the
participation of the uninformed and risk having to waste time trying to
convince them which options to pursue? Hierarchical work organization
empowers a few and gives those few every incentive to replace
formally democratic rules with their own explicit domination of every

facet of decision-making. Corporate divisions of labor do not advance
and in fact overwhelmingly obstruct self-management.

What implications do corporate divisions of labor have for solidarity?
The differential division of circumstances and power between you and
me is obviously not conducive to empathy between us. If we make
these differences systematic, with, say, 20 percent monopolizing the
best and most empowering conditions of work, and 80 percent largely
or exclusively doing what they are told— solidarity between those who
rule and those who are ruled dies a quick but painful death. Worse,
suppose, as is generally the case, that once there is a corporate
division of labor it is elaborated into a broad and pervasive class
division. Those above a certain cut-off in the empowerment hierarchy
are in one class, which largely defines and controls its own
circumstances and the circumstances of others below, and those who
are below that cut-off are in another class, which obeys orders and
gets what its members can eke out. The manners, lifestyles, dress,
habits, and even language of the two classes come into opposition. The
one class monopolizes infor- mation, training, knowledge, and the
associated status and perquisites of expression and performance, plus
all the income it can grab for itself via its inflated bargaining power.

The other class, excluded from training and saddled with deadening
activity, drags along behind with marginal bargaining power and
income, either bent in submission, or, if aroused to its plight, angry and
rebellious. The coordinator class looks down on workers as instruments
with which to get jobs done. It engages workers paternally, seeing
them as needing guidance and oversight and as lacking the finer
human qualities that justify both autonomous input and also the higher
incomes needed to support more expensive tastes. Workers in reply
look up at coordinators as well-educated and knowledgeable— which in
fact they generally are—but also as arrogant, elitist snobs lacking
human sentiment and solidarity. Workers may wrongly accept that the
empowerment and capacity differentials between themselves and
coordinators are due to innate differences, and may thus bemoan their
own sad—though seemingly inevitable—lot, while hating, but
succumbing to, the coordinators' arrogance. Or they may realize that
the differentials in talents, knowledge, and confidence derive mostly
from widely different circumstances in home life and schooling and of
course in the division of labor that literally imposes hierarchical
outcomes regardless of people's actual potentials and capacities. In
any event, as they may realize, such differences in no way justify
differentials in income and power. But in either case, or in any more
conflicted and ambivalent mix of perceptions, solidarity is impeded by
such a class division, and hostility and supervision grow in its place.

What about equity? If we have a hierarchy of empowerment, we can
confidently predict that those above will use their differential power to
skew income to their own material advantage. Why? Imagine that
some folks have better conditions and more control because of a
hierarchical division of labor. Will those folks then decide that they
deserve more income for being more trained, more informed, and for
having more responsibility, as well as to feed their more refined tastes
and desires? Or will they decide that the exhausted and less educated
workers enduring worse conditions deserve more income for their
greater sacrifice?

The reason hierarchical divisions of labor obstruct material equity is
that the only way for those who are higher to see that those who are
lower in the hierarchy deserve more pay would be to feel that those
lower are sacrificing greatly due to their worse conditions and lesser
empowerment. But if I am on top and actively agree that those below
are suffering, then to retain self-respect I will have to wonder if I am
unfair for being on top. The way for me to instead feel good about
being above others is to tell myself that I belong above them and that
they belong below. I arrive at the conclusion that those who are
disempowered are suited only to obey. They are comfortable and
properly utilized when they are being obedient. They would be fish out
of water and make a mess of economic outcomes if they were forced
to bear more responsibility. We who are on top are comfortable and
properly utilized in our higher station despite our having to shoulder
tremendous responsibilities. We belong here and society needs us
here, and both to be com- fortable and to be able to act on all this
responsibility as well as so we can better enjoy the finer things in life
that our refined tastes desire, we need extra income. The others won't
miss it, so let's give it to ourselves, of course. That's the logic that
translates predictably persisting differentials in power into parallel
differentials in income.

What about diversity? On the one hand, by forcing people into classes
and pressuring conformity within and confrontation between classes,
hierarchical divisions of labor reduce diversity within classes and
impose harmful differences between them, neither of which is a
positive attribute. But if we go further and look at jobs themselves, the
case is starker. If jobs are created by combining a set of tasks that are
internally similar to one another in their quality of life and
empowerment effects, we can reasonably predict that most jobs will be
less diverse in their attributes than if jobs are created by combining a
set of diverse (but compatible) tasks so that the overall quality of life
and empowerment impact of the package is average. It therefore
doesn't take extensive analysis to figure out whether a hierarchical
division of labor will yield greater workday diversity than a non-

hierarchical one. For about 80 percent of the workforce, the difference
is between having a job that has only rote tasks and having a job with
some rote but some conceptual tasks, or between having a job that
has only tedious tasks and having one that has some tedious but also
some engaging tasks.

Can we summarize this brief survey? Are hierarchical production
relations consistent with the goals of a participatory, equitable,
economy? Clearly they are not, for reasons obvious to most workers
but nonetheless obscure to many economists. If someone's work is
mechanical and mindless it will diminish her or his self-esteem,
confidence, and self-management skills. On the other hand, if
someone's work is exciting and challenging, it will enhance her or his
ability to analyze and evaluate economic alternatives. Hierarchical
work leaves different imprints on personalities. For those at the top, it
yields an inquisitive, expansive outlook. For those at the bottom, it
leaves an aggrieved and self-deprecating outlook, or induces anger.
People's confidence or self-doubts and their intelligence or ignorance
all derive, in part, from the kind of economic activities they daily
undertake. Under hierarchical arrangements, many capable citizens
enter industry only to exert little influence and do exclusively boring
work. Those few who advance to more fulfilling and commanding jobs
generally have freer workdays and greater "thinking" time than those
who remain at the bottom. Each promotion increases immediate power
and also the beneficiary's skill and information advantages to bring to
future competitions. Not only will this lead to disparate opportunities
for participation, but corporate production relations will generate
remuneration as well. People who occupy favored positions in
production hierarchies will appropriate more pleasant work conditions
and greater consumption opportunities than those afforded their
subordinates. And this will be the case whether the hierarchy is based
on differential ownership or on differential access to information and
decision-making opportunities, or on both.

Central Planning

Central planning is a conceptually simple solution to the problem of
economic allocation. Within this system, a group of planners
accumulates massive information in various ways, massages it,
imposes some broad values on it, and emerges with a list of
instructions for producers and prices for consumers. They then send
this out to the rest of society to implement.

In short, the planning system gathers data and sets economic priorities
that planners then use to determine how best to achieve society's
goals with society's limited productive resources. The system consists
of a relatively small group of planners in a central planning apparatus
communicating with managers in enterprises. The planners decide
what to produce, where workers should work, what income levels
consumers will have, and by determining prices also what they can
consume. The information goes from planners to managers and on to
workers. This can all occur with less or more input allowed to the broad
public, and while central planning is a non-market system, highly
truncated markets can certainly be used to distribute goods to
consumers once they are produced, to gather data, or even to assign
particular workers to particular enterprises. But the broader decisions
of how much of each product to produce, how many workers of
different skills should work where, and how much they should be paid,
are all determined overwhelmingly by the central plan, even when
limited markets exist to assist lesser determinations.

Many advocates of centrally planned public-enterprise economies such
as the old Soviet Union viewed their goal as a classless economy and
saw central planning as an approach to allocation consistent with
eliminating classes. Everyone in such a system will be workers and
consumers, they argued. All workers and consumers will be on an
equal footing because none will own the means of production. The
nightmare of private appropriation of scarce social resources along
with the inequity, alienation, and inefficiency fostered by the
accumulation of profits by narrow elites is replaced, their prognosis
continues, by a rational use of productive resources to best achieve
society's economic goals. In this view, central planners and managers
knowledgeably translate workers' and consumers' desires about
consumption and about work into the most efficient possible
assignment of productive assets. In reality, of course, this is not what
occurred in the Soviet Union, Eastern Europe, China, Cuba, or
anywhere else that the system has been deployed, nor is it what we
would predict from modeling the system's institutions. Instead, in
history and in our predictions, classes emerge even in the least corrupt
and least authoritarian centrally planned economies. Moreover, this is
not due solely to non-democratic political influences nor to betrayals
by corrupt leaders, but is instead an intrinsic outcome of central
planning.

That is, instead of having a capitalist ruling class, in centrally planned
economies we see a coordinator class of planners and managers
inexorably becoming the ruling class. The idea that the coordinators
who monopolize positions of decision-making influence are simply
there to carry out the will of workers and consumers is a doublespeak

myth, of course. Instead it is workers who labor at the behest of the
coordinator class of planners, managers, and other empowered
economic actors. The coordinators consume more than ordinary
workers, work under more pleasant conditions, and make all the
important economic decisions—whether at the broad plan- ning level
or as managers in separate firms. Ordinary workers are alienated from
decision-making and have inferior work conditions and consumption
opportunities. This is not to say that all workers are equally exploited
or alienated in all centrally planned systems, or that all workers are
more exploited in any centrally planned economy, however
enlightened, than in any capitalist system, however barbaric. But even
at its best, central planning is plagued by class division, exploitation,
oppression, and alienation.

How well does central planning do its allocative job? Do its operations
result in undue waste, miscommunication, gluts, short- ages, and so
on? The answer is well known and a bit different than publicly
assumed. Central planning cannot be efficient unless central planners
know the quantities of available resources and equipment, know the
ratios in which production units can combine inputs to yield desired
outputs, are informed of the relative social worth of final goods, have
sufficient computing facilities to carry out quantitative manipulations,
and can impose incentives that will induce managers and workers to
carry out their assigned tasks.

But, if we generously grant these assumptions—which is no less
reasonable than granting the assumptions economists typically make
about markets—then we must agree that central planners could, in
fact, calculate an efficient production plan and then choose
intelligently from a variety of options to decide how to assign workers
to jobs and how to distribute goods to consumers. In such
circumstances, that is, central planners can successfully solve a giant,
economy-wide problem of how to maximize the social value of final
output by calculating how much of each product to produce via each
technique that can be used to make the product. The planners choose
from among all the production plans that satisfy the various
constraints operating in their economy the one plan that yields the
greatest value of final output as judged by the planners' valuations of
the worth of products. The assumptions above guarantee that the
planners will calculate an optimal plan and will be able to get the
"optimal plan" they calculate carried out.

But even if central planning can theoretically function this smoothly
and effectively, will it facilitate each actor having appropriate
proportionate decision-making influence, or will it place excessive

power in a few hands and diminished power in everyone else's? In all
versions of central planning:

1 The famous "down/up down/up” process is down-go- questions, up-
come-answers; down-go-orders, up-comes- obedience.

2 Qualitative information that is essential to evaluating human
outcomes is never generated, much less dis- seminated.

3 Elite conceptual workers—the central planners and plant managers
who we call coordinators—monopolize the technical information
required for decision-making.

4 The only management left to individual production units is to
"manage” to fulfill the central planners' targets using inputs allotted
them by the central planners.

In other words, central planners gather information, calculate a plan,
and issue "marching orders" to production units. The relationship
between the central planning agency and the production units is
authoritative rather than democratic, and exclusive rather than
participatory. Moreover, since each unit is subordinate to the planning
board and any superior agent will always seek effective means for
holding subordinates accountable, methods of surveillance and
verification will be employed to minimize malfeasant lying and
shirking. To these ends, central planners appoint and then reward and
punish managers according to the performance of their units rather
than establishing procedures that give power to rambunctious workers'
councils. Since it is senseless to punish managers for the behavior of
workers over whom they have no control, central planners grant
managers dictatorial powers over their workers. What begins as a
totalitarian relationship between the central planning agency and
production units ends up extending to managers a dictatorial say over
workers. Not only do workers have no say over what they produce and
what inputs they work with because central planners make allocative
decisions outside the workplace, workers have little say over how they
use inputs to meet their output quotas because plant managers make
these decisions unilaterally. Real world central planning therefore
prevents workers from deciding how to use their laboring capacities
because its logic requires pervasive hierarchy.

Even if we assume the planners have all the information they need;
that the social values of final goods are determined by a completely
democratic voting procedure among consumers; that the planners
forswear all opportunity to bias the social values guiding planning in
favor of their own interests; that the planners accurately calculate the

optimal plan; and that workers carry out the plan to the letter of their
instructions (a very long and utterly implausible list of "ifs")—
nonetheless, even in this highly unreal, best-case scenario, central
planning would still fail to deliver self-management for three reasons:

1) Since the central planners monopolize all the quantitative
information generated in the planning process, workers and consumers
lack access to quantitative information about the relationship between
different primary resources and final goods in the economy. And since
very little qualitative information is generated in central planning
about the human aspects of different work and consumption
processes, workers and consumers lack information about the
situations of other workers and consumers. But this means workers
and consumers in centrally planned economies do not have the
information required to engage in intelligent and responsible self¬
management. How can people sensibly decide what to produce and
consume without knowing how their choice will affect others—even if
they were allowed to do so?

2) Regarding valuation of outputs, central planning could let every
consumer "vote" say 10,000 points, indicating his or her relative
preferences for different final goods and services. But even this fair
and democratic consumer voting procedure would deny self¬
management for workers. Once votes were tallied and used to
formulate the planers' objective function, even the best central
planning would translate those preferences into specific work plans for
each and every production unit. But that means every
consumer/worker would have had the exact same decision-making
input (10,000 votes) as every other consumer/worker over every facet
of what to produce and how to produce it in every single workplace.
Even assuming this structure could ever be harnessed to yield
workable and sensible outcomes, which it could not, it would fail to
provide self-management for workers because it would not give
workers input into production decisions according to how much they
are affected by them. Your opinion about what to produce and how to
produce it should count more towards what goes on in your own
workplace than the opinion of someone who is less affected by what
happens in your workplace—just as their opinion should count more
than yours about their workplace. But the best that central planning
can conceivably do (a goal that it never remotely attains due to
devolution into class division) is to give everyone equal input in all
economic decisions via a democratic determination of the plan's
objective function. Central planning is therefore ill-suited to providing
actors influence in accord with the differential impacts that different
decisions have on different workers and consumers.

3) Finally, as we have discussed at greater length in other contexts, in
any economy individuals rationally orient their preferences toward
opportunities that will be relatively plentiful and away from those that
will be relatively scarce. We know that orienting ourselves to want
what we cannot have or cannot afford yields little satisfaction, while
orienting ourselves to want what we can have and can afford can yield
more. Thus our preferences are not fixed and we influence them by our
actions and choices. If a bias arises in the expected future supply of
particular roles or goods so that some are under-priced and others are
overpriced, people will orient their development accordingly. If I can
get commodity X at a price below what it ought to sell at, and can get
commodity Y only at an inflated price above what it ought to sell at, I
am going to feel a real incentive to change my preferences from Y
toward X to benefit from this mispricing. On average, over a whole
population, tastes will drift as a result. In the case of central planning,
the bias against providing self-managed work opportunities keeps
people from developing (systematically) desires and capacities for self¬
management, and instead promotes steadily greater apathy among
the workforce. That is, the apathy of its workers often noted by those
who studied the Soviet and Eastern European centrally planned
economies was not genetic, of course, but a logical result of the bias
against self-managed work opportunities in those societies, as well as
a result of political alienation. But this apathy would develop even in
the best case of central planning, much less in real world versions.

Why should a worker in a centrally planned economy develop a keen
interest in what she will produce or how she will produce it, or develop
a powerful desire to influence such decisions? It is better not to care.
(The parallel to the disinterest in participating in political democracy by
those without means to influence agendas is obvious.)

Now what about solidarity, equity, and diversity? We need not spend
excessive time on these. With a class division between workers and
coordinators (including central planners, local managers, and other
actors who share their relative monopoly on decision-making options
and access to information), solidarity is clearly less than it would be
with classlessness. With planners and managers in position to reward
themselves excessively and possessing a world view that sees
themselves as "conceptual" and "in charge” and that sees society's
workers as "needing to be cared for," we can predict with great
confidence a growing gap in income, perks, and conditions. So there is
no equity.

Diversity is subtler, and can increase or decrease in this model
depending on many variables, though, in practice (as all the jokes
about "communist robotic regimentation" convey), our expectation is
not positive. All in all, not surprisingly central planning is an allocation

system that obstructs the values we favor including equity of
circumstance and income, solidarity, self-management, and diversity.

Markets

"Markets” is a term denoting allocation via competitive buying and
selling at prices determined by the competitive offerings of the buyers
and sellers. A market is therefore not merely the food store or the mall,
but the entire entwined allocation system of buyers and sellers each
acting to further their own interests by selling dear and buying cheap.

Equity

Markets undeniably often permit buyers and sellers to interact
conveniently for mutual benefit. In fact, taking into account only their
own immediate circumstances, market exchanges nearly always
benefit both buyer and seller. But unfortunately, immediate
convenience and relative short-run benefit for both buyer and seller do
not imply immediate equity or efficiency, much less a positive social
interaction over extended periods. In these wider dimensions market
exchange aggravates inequities, generates grossly under- estimated
inefficiencies, and disastrously distorts human relations. To judge
markets regarding equity we need some shared framework of beliefs
about how markets affect people's attributes and people's attributes in
turn affect the operations of markets. We propose the following:

Proposition 1: People have different abilities to benefit others and
different abilities to secure a favorable share of the benefits from
exchange. We are not all alike in these (or any) respects.

Proposition 2: Very few, if any, of the many abilities people may
have to benefit others or to secure benefits for themselves bestow a
rightful moral claim to benefit more or exercise more decision-making
authority than those of lesser ability.

Proposition 3: Market exchanges permit those with greater abilities
to benefit more and exercise greater economic power than do those
with lesser abilities. These inequities occur even with fully informed
exchanges in perfectly competitive markets, much less in markets as
we know them in real economies with advertising, unequal bar- gaining
power, etc.

If these propositions are true, then clearly markets cannot provide a
morally justified allocation of income and will therefore fail to uphold
the values we arrived at in the last chapter. But are the propositions
true—and moreover, are they true not merely in existing historical
circumstances for existing and arguably contingent market
arrangements, but true intrinsically and unavoidably for all market
economies due to the very nature of market exchange?

The first part of p one is that people have different abilities to benefit
others. This is self-evident. Mozart obviously had greater ability to
please music lovers than his "rival" Salieri. Michael Jordan had greater
ability to please basketball fans than other NBA players. A skilled brain
surgeon has greater ability to benefit her patients than a garbage
collector to benefit his "clients” (except when New York City is in day
twenty of a sanitation workers' strike). In short, people are born with
unequal "talents” for benefiting others, and differences in education
and training or even just location can instill in people different abilities
to benefit others even even when they do not have significant genetic
differences.

We should note, however, that as evident as proposition one is, there
are nonetheless people who reject it, at least emotionally. They
presumably feel that once one admits such differences one is on an
inexorable slide toward justifying economic inequality. Their opposition
to economic inequality is so great it causes them to deny that genetic
and training differences exist in a prophylactic move to prevent what
they deem inevitably correlated inequality before the fact. They think
that to assert that people have differential talents and abilities is
"elitist."

However, two problems with this attitude arise: (1) To deny the
existence of different abilities is obviously out of touch with reality.
Imagine a society that refused to give glasses to people with poor
eyesight or gave lower incomes to people with poor eyesight. Some
might respond to this obvious injustice by denying that people's
genetically determined attributes were different. But this would be
silly. Wishing it so doesn't make it so, and anyway, there's no reason
why social or economic inequality is a necessary consequence of
inequality in people's eyesight. What needs to be challenged is not the
fact that people differ in their eyesight, but the social practice that
rewards people differently based on their eyesight.

But (2), imagine that there were no differences in talents, abilities,
etc.—what a boring world it would be if each and every person had the
same talents, no one was exceptional in any respect, and each was
able to develop capabilities only just like those that everyone else had

already developed. Sometimes aspirations for equality lead justice-
advocates down strange intellectual paths. In any event, other than for
well-motivated people who worry about its implications and who will in
any event be freed from these feelings by the rest of our arguments,
the first part of proposition one is not controversial, so we move on.

The second part of proposition one is that when operating in the
context of markets, people will have different abilities to secure a
favorable share of the benefits of exchanges. This is equally self-
evident, but less often noted.

Different abilities to secure a greater share of benefits from
competitive exchange can result, for example, from differences in
people's abilities to withstand failure to reach an agreement. A single
mother with a sick child and no other means of securing health
insurance is at a disadvantage negotiating with a large corporate
employer compared to someone with many options who can hold out
for better terms, even if the two have identical skills. A peasant with no
savings is at a disadvantage negotiating a loan for seed and food with
a rural moneylender compared to a corporation able to withstand
delays.

Different abilities to benefit from competitive exchange can also result
from more accurate predictions about uncertain con- sequences or
from differential knowledge of the terms of exchange (which in turn
could stem from genetic differences in this particular "talent" or
differences in training or, more often, from different access to relevant
information).

Or differences could stem from personality traits that make some more
willing or able to drive a hard bargain than others, or to abide the pains
risked or, more often, the pains imposed on others. The truism that in
our society nice guys finish last attests to this last point. If you cannot
abide hurting others or at least ignoring the hurt endured by others, in
a competitive context you are at a severe disadvantage when it comes
to your own self-advancement. Differences in social values could (and
do) prevent some people from seeking maximum advantage at the
expense of others, even as they encourage others to do so. Different
opportunities and/or willing- ness to disobey the golden rule to do unto
others as you would have them do unto you and to instead obey the
rule of the marketplace, to do others in before they do you in, make for
different abilities to garner benefits in the context of competition.

And unfortunately, competition—the famous harmonizer of the private
and public interest—by systematically weeding out the less devious
and aggressive actors, enforces lowest common denominator

consciousness regarding willingness to invert the golden rule. So, in
the ways listed above and others that could be enunciated as well, the
second half of proposition one also proves true. And once it is clearly
stated, about this there is virtually no dissent. After all, a large part of
contemporary economic activity involves precisely trying to get ahead
by utilizing such differences.

As compared to proposition one, the issue addressed in proposition two
is more philosophical and complex, but luckily already navigated in the
last chapter. What reasons for differential compensation are morally
compelling and what reasons carry no moral weight? Our earlier
discussion of values established that only acts under our control and
not owing to luck and circumstance provide moral justification for
income differentials, which makes proposition two true, with associated
controversies having been dealt with in the last chapter.

You do this and I do that so that the total of what we both do is greater
than if, instead, we reversed it and I did that and you did this. Who
gets the gain? Proposition three points out that those with greater
abilities to capture the benefits of market exchange will obviously
capture a greater share of the efficiency gains from a division of labor
in a market economy. And any student of the laws of supply and
demand knows that the greater the benefit a commodity affords a
buyer, the higher the price a seller will receive, other things being
equal. So those with greater ability to benefit others will also benefit to
a greater extent than those less able to benefit others.

Two actors or agents meet in a market exchange. This occurs over and
over, with partners changing, rotating, and otherwise varying in an
unpredictable pattern. Those who can benefit others better can
demand more in return; those who can accrue more of the benefits
that exchanges make available can accrue more in return. Since both
these differentials among those playing the roles of buyer and seller
exist, differential outcomes arise. Since having greater wealth confers
further advantage, the differentials steadily enlarge. In time, therefore,
there emerge people who make substantially more and people who
make substantially less. More formally put, taken together propositions
one, two, and three spell out the case that market economies will
subvert equity whether combined with private or public enterprise:

1 People have different abilities to benefit others and to capture the
efficiency gains from market exchanges.

2 As established last chapter, neither greater innate nor learned
ability either to benefit others or to capture benefit for oneself earns
the more able any moral right to a greater share of the benefits of

economic cooperation. Only greater effort or sacrifice merits greater
reward. But in fact ...

3 Markets will permit those with greater abilities of either kind to
reap greater economic rewards than those of lesser abilities will
receive, even when those with greater abilities exert less effort and
sacrifice. (And any effort to offset this with tax policies will subvert the
proclaimed efficiency of markets.)

More simply put, in a market economy the big strong cane cutter gets
more income than the small weak one regardless of how long and how
hard they work. The doctor working in a plush setting with comfortable
and fulfilling circumstances earns more than the assembly worker
working in a horrible din, risking life and limb, and enduring boredom
and denigration, regardless of how long and how hard each works. To
earn more due to generating more valuable output despite
contributing less effort and enduring less sacrifice goes against the
values that we settled on last chapter but is a defining feature of
market remuneration. Is this there is for our critique, or are there
additional equity problems?

First, it is instructive to note that even if rewarding according to the
social value of contribution were regarded as fair, which our values
deny, market valuations of workers' contributions system- atically
diverge from an accurate measure of their true social contribution for
two reasons:

1 In market systems we vote with our wallets. The market weighs
people's desires in accord with the income they muster behind their
preferences. Therefore the value of contributions in the marketplace is
determined not only by people's relative needs and desires but by the
distribution of income enabling actors to manifest those needs and
desires. Thus, as measured in the marketplace the contribution of a
plastic surgeon reconstructing noses in Hollywood will be greater than
the value of the contribution of a family practitioner saving lives in a
poor, rural county in Oklahoma —even though the family practitioner's
work is of much greater social benefit by any reasonable measure. The
starlets have more money to express their desires for better looks than
the farmers have to keep alive. If you pay more, it will cause what you
pay for to be "valued” more highly. An inequitable distribution of
income therefore will cause market valuations of producers' outputs to
diverge from accurate measures of those outputs' implications for
social well-being. Plastic surgery trumps saving malnourished children
not because reversing malnourishment is less valuable then cosmetic
surgery, but because Hollywood stars have more cash to express their
preferences than do those who suffer starvation. It follows, then, that

even those who urge remunerating according to output shouldn't be
market advocates, because markets don't measure the value of
outputs in tune with the outputs' true social benefits.

2 Moreover, markets only incorporate in their valuations the wills of
immediate buyers and sellers. The preferences of the auto consumer
and the auto dealer are well accounted for (assuming we ignore
income differentials distorting the weights they are accorded) when
the former buys a car from the latter, but others in society who are
neither buying nor selling the car but who breathe the auto pollution
the car generates, have no say at all in the transaction. The price of a
car negotiated by buyer and seller doesn't reflect the impact of the
car's pollution on the broader populace since the broader populace
isn't involved in the direct transaction and their views on the matter
are never "polled." Sometimes such broader impact is positive—a
person becomes enlightened by buying a book and in turn benefits
others. The positive benefits to others did not affect the initial
purchase price. Sometimes broader impacts are negative: a person
drinks excessively and eventually spouses and friends and the broader
society suffer lost productivity, increased costs of health care, and the
horrors of abuse and drunken driving. The negative by-products did not
impact the initial purchase. The point of this is that the market over¬
values some goods by not accounting for their negative "external"
effects beyond direct buyers and sellers, and undervalues others by
not accounting for their positive "external" effects beyond direct
buyers and sellers. This mis-valuation of transactions that have
implications beyond immediate buyers and sellers implies in turn that
those who produce goods or services with negative unaccounted
effects will have the value of their contributions over-valued in market
economies, while others who produce goods or services with positive
unaccounted effects will have the value of their contributions
undervalued. So again, even those who believe in remuneration
according to output (rather than according to effort and sacrifice, as
we favor) ought to disavow markets, since even the freest markets
don't properly measure social costs and benefits. They remunerate
according to contribution, but they mis- measure contribution in
systematic and socially harmful ways.

Using markets to reward contribution to output is more or less as if we
believed that people ought to be paid for how much they weigh, and
we then adopted an elaborate system to find this out, but the system
that we chose for the task involved a scale with additional bags of sand
added to one side or the other, thus increasing the weight of some and
not others. Obviously the whole weight norm in the first place is
immoral, as we believe remunerating for output is. But, in addition, if
one does advocate the weight norm, it would make no sense for

anyone to also advocate a set of institutions that in fact systematically
misrepresent it—unless, of course, there were other things about that
system one greatly liked and the rhetoric about the weight norm was
mere window dressing that one didn't take seriously.

To return to our own standards, it is very important to note that the
problem of some people receiving higher wages and salaries than
others who make greater personal sacrifices cannot be corrected in
market economies without creating a great deal of inefficiency. The
issue is both intrinsic to markets and also intractable under their sway.
Even at their very best, in market transactions, labor is paid what is
called its "marginal revenue product"—the valuation of its contribution
to output—which, as we have seen, can differ significantly from a true
valuation of output, much less from effort expended. But suppose we
realize the injustice of this basis for remuneration and decide to correct
it by keeping markets otherwise unchanged while legislatively
substituting "effort wages” (i.e. just wages) for "marginal revenue
product ( unjust ) wages." Can't that ameliorate this particular problem?
We keep markets, generally, but we correct market wages. What is
there to dislike? To a degree this would ameliorate one problem, yes,
but it would also lead to inefficient uses of scarce labor resources,
thereby offsetting any gains made.

The point is this: while our morals lead us to want to remunerate labor
according to effort and sacrifice and not the true value of labor's
output, on the other side of the allocative coin, we want to use the true
value of output in deciding how much labor should be apportioned to
different tasks. For example, you do not want to value something more
and thus put more resources into it merely because it takes more
effort to produce. Instead, you only want to produce more of
something if the product's worth to people actually warrants it. So
suppose we pay labor according to effort and sacrifice in an otherwise
market driven economy. As a result the markets will operate as though
the value of the product of work is measured in large part by the effort
and sacrifice that was expended in its production, but this in turn
reduces attention to the impact of the product on recipients. In other
words, while we do not want to pay the surgeon according to the value
of the surgery to society for moral reasons having to do with what we
believe people should earn, we also do not want to say that the value
of the surgery should be determined solely by effort and sacrifice
involved in it. Instead, the value of the surgery depends largely on the
benefits it bestows. A good allocation system has to remunerate in
accordance with our preferred values of effort and sacrifice, of course,
but it also has to allocate in light of full true social costs and benefits.
Since in a market system labor costs form a substantial portion of total
production costs of most goods and services, if wages are forcibly

made just, with markets this would distort the valuation of the
products of that labor, in turn causing the entire cost structure and
price system of the economy to deviate substantially from reflecting
true costs and benefits.

The adapted system would then have products valued according to
what was being paid to labor for its effort and sacrifice but not
according to the amount that the products are desired by their
consumers. To use the terminology of economists: in a market system
with effort-governed wages, goods made directly or indirectly by labor
whose effort wages were higher than their marginal revenue product
would sell at prices higher than their real costs, while goods made
directly or indirectly by labor whose effort wages were lower than their
marginal revenue product would sell at prices lower than their real
costs. Since prices in a market economy help to determine not only
what laborers get paid but also how much of what items are produced,
any attempt to make wages more equitable while retaining market
exchange must cause a systematic misuse of scarce productive
resources.

More of some items and less of others will be produced than proper
valuations of their social benefits and costs would dictate. In other
words, if left to their own devices, market economies distribute the
burdens and benefits of social labor unfairly because workers are
rewarded according to the market value of their contributions rather
than according to their effort or personal sacrifice. But if we correct
this problem by enforcing wages that are better correlated to actual
effort and sacrifice, then the adapted market economy will misvalue
products and misallocate productive resources even more than
otherwise.

In addition, why would the economically advantaged in any market
economy not translate their advantages in resources and leisure into
disproportionate political power with which to defend market wage
rates against critics? Why would they not use their disproportionate
political power to obstruct attempts to correct wage and salary
inequities? Of course, the answer is the advantaged would take both
these paths, and very effectively, as we have seen throughout history.

Moreover, people naturally tend to rationalize their behavior so as to
function effectively and respect themselves in the process. The logic of
the labor market is: he or she who contributes more gets more. When
people participate in the labor market, in order to get ahead they must
defend their right to a wage on the basis of their output. The logic of
redistributing income to attain more equitable wages, however, runs
counter to rewarding output. So participation in markets (with or

without private ownership) not only does not lead people to see the
moral logic of redistribution, it inclines them to favor the argument that
everyone gets what they contributed, so redistribution is unfair.
Participation in markets empowers those who oppose redistributive
schemes and intellectually and psychologically impedes those who
would benefit from them.

In conclusion, while of course the degree of inequity is far greater in
private enterprise economies wherein people can accumulate
ownership of means of production and a flow of profits from that
property, income inequalities due to unequal human talents and
abilities, though smaller, are inequitable for the same reason. When
payment is based on the value of contribution to output, unavoidable
unequal distribution of human or non-human talents, abilities, and
tools will lead to morally unjustifiable differences in economic benefits.
Moreover, whereas it is theoretically possible to equalize ownership of
non-human assets (like training or tools) through their redistribution, it
is not possible to do so in the case of unequal human assets (innate
talents, size, etc.). The only conceivable way to eliminate "doctor
versus garbage collector" inequities of the sort discussed last chapter
is to base benefits on something other than contribution to output and
this is not possible in any kind of market economy.

Solidarity

Disgust with the commercialization of human relationships is as old as
commerce itself. The spread of markets in eighteenth century England
led the Irish-born British political philosopher Edmund Burke to reflect:

The age of chivalry is gone. The age of sophists, economists, and calculators is upon
us; and the glory of Europe is extinguished forever.

Likewise, the British historian Thomas Carlyle warned in 1847:

Never on this Earth, was the relation of man to man long carried on by cash-payment
alone. If, at any time, a philosophy of laissez-faire, competition and supply-and-
demand start up as the exponent of human relations, expect that it will end soon.

And of course through all his critiques of capitalism, Karl Marx
complained that markets gradually turn everything into a commodity
corroding social values and undermining community:

[With the spread of markets] there came a time when everything that people had
considered as inalienable became an object of exchange, of traffic, and could be
alienated. This is the time when the very things which till then had been

communicated, but never exchanged, given, but never sold, acquired, but never
bought—virtue, love, conviction, knowledge, conscience, etc.— when everything, in
short passed into commerce. It is the time of general corruption, of universal venality
[....] It has left remaining no other nexus between man and man other than naked
self-interest and callous cash payment.

Like all social institutions, markets provide incentives that promote
some kinds of behavior and discourage others. Markets minimize the
transaction costs of some forms of economic interaction, especially
those that are personal and involve private agents, thereby facilitating
them, but markets do nothing to reduce the transaction costs and
thereby facilitate other forms of interaction, especially those that are
public and involve collective implications.

Even beyond simple inefficiencies, if the forms of interaction that are
encouraged are mean-spirited and hostile and the forms of interaction
that are discouraged are respectful and empathetic, the negative
effects on human relations will be profound.

In effect, advocates of markets say to us: "You cannot cooperatively
and self-consciously coordinate your economic activities sensibly, so
don't even try. You cannot orchestrate a group of inter-related tasks
efficiently in light of people's shared human needs, so don't even try.
You cannot come to equitable agreements among yourselves, so don't
even try. Just thank your lucky stars that even such a socially
challenged species as yourselves can still benefit from a division of
labor thanks to the miracle of the market system wherein you can
function as greedy, non-cooperating, competitive, isolated atoms, but
still get social results. Markets are a no-confidence vote on the social
capacities of the human species."

But if that daily message were not sufficient discouragement, markets
mobilize our creative capacities and energies largely by arranging for
other people to threaten our livelihoods and by bribing us with the lure
of luxury beyond what others can have and beyond what we know we
deserve. They feed the worst forms of individualism and egoism. And
to top off their anti-social agenda, markets munificently reward those
who are the most cut-throat and adept at taking advantage of their
fellow citizens, and penalize those who insist on pursuing the golden
rule. Of course, we are told we can personally benefit in a market
system by providing service to others. But we also know that we can
generally benefit a lot more easily by tricking others. Mutual concern,
empathy, and solidarity have little or no usefulness in market
economies, so they atrophy.

Why do markets impede solidarity? For workers to compre- hensively
evaluate their work they would have to know the human and social as

well as the material factors that go into the inputs they use plus the
human and social consequences their outputs make possible. But the
only information markets provide, with or without private property, are
the prices of the commodities people exchange. Even if these prices
accurately reflected all the human and social factors lurking behind
economic transactions, which they most certainly don't, producers and
consumers would still not be able to adjust their activities in light of a
self-conscious understanding of their relations with other producers or
consumers because they would lack the qualitative data to do so, and
they would still have to compete. It follows that markets do not provide
the qualitative data necessary for producers to judge how their
activities affect consumers, or vice versa. The absence of information
about the concrete effects of my activities on others leaves me little
choice but to consult my own situation exclusively. The fact that marks
pit buyers against sellers—the one trying to buy cheap and the other to
sell dear—means the absence of information causes no aggravation.
Rather, all economic actors are forced to be anti-social and lack the
means to do otherwise, in any event.

That is, the lack of concrete qualitative information and the obscuring
of social ties and connections in market economies make cooperation
difficult, while competitive pressures make cooperation irrational.
Neither buyers nor sellers can afford to respect the situation of the
other. Not only is relevant information unavailable, solidarity is self-
defeating. Polluters must try to hide their transgressions, since paying
a pollution tax or modernizing their equipment would lower their
profits. Even if one producer in an industry does not behave
egocentrically, others will. If altruists persist in socially responsible
behavior they will ultimately be driven out of business for their trouble,
with egoists rising to prominent positions. Market competition
squashes solidarity regardless of encompassing ownership relations.

But rather than further pursue our rejection of markets on grounds of
their implications for human relations, it may be more compelling to
hear the US-based economist Sam Bowles, a left advocate of market
allocation, eloquently explain this failure of markets:

Markets not only allocate resources and distribute income; they also shape our
culture, foster or thwart desirable forms of human development, and support a well-
defined structure of power. Markets are as much political and cultural institutions as
they are economic. For this reason, the standard efficiency analysis is insufficient to
tell us when and where markets should allocate goods and services and where other
institutions should be used. Even if market allocations did yield [economically
efficient] results, and even if the resulting income distribution was thought to be fair
(two very big "ifs"), the market would still fail if it supported an undemocratic
structure of power or if it rewarded greed, opportunism, political passivity, and
indifference toward others. The central idea here is that our evaluation of markets—

and with it the concept of market failure-must be expanded to include the effects of
markets on both the structure of power and the process of human development ....

As anthropologists have long stressed, how we regulate our exchanges and
coordinate our disparate economic activities influences what kind of people we
become. Markets may be considered to be social settings that foster specific types of
personal development and penalize others. The beauty of the market, some would
say, is precisely this: It works well even if people are indifferent toward one another.
And it does not require complex communication or even trust among its participants.
But that is also the problem. The economy—its markets, workplaces and other sites—
is a gigantic school. Its rewards encourage the development of particular skills and
attitudes while other potentials lay fallow or atrophy. We learn to function in these
environments, and in so doing become someone we might not have become in a
different setting. By economizing on valuable traits—feelings of solidarity with others,
the ability to empathize, the capacity for complex communication and collective
decision-making, for example—markets are said to cope with the scarcity of these
worthy traits. But in the long run markets contribute to their erosion and even
disappearance. What looks like a hardheaded adaptation to the infirmity of human
nature may in fact be part of the problem.

In short, markets pit buyers against sellers creating an environment
that is almost precisely the opposite of what any reasonable person
would associate with solidarity. In each market transaction one party
gains more only if the other party gains less. What ought to be the
case—economic actors sharing in benefits and costs and moving
forward or back in unison with the interest of each actor furthering the
enhancement of other actors—is turned topsy-turvy, to the point where
each actor's interest is opposed to that of all others. As Bowles
explains, even against our better natures, this literally instructs us,
molds us, and cajoles us into being unsympathetic egoists of the worst
sort.

Self-Management

Confusing the cause of free markets with that of democracy is typical
of modern commentary, but astounding given the overwhelming
evidence that market systems have disenfranchised larger and larger
segments of the world's body politic. First, markets undermine rather
than promote the kinds of human traits critical to the democratic
process. As Bowles, who is, remember, an advocate of markets,
explains:

If democratic governance is a value, it seems reasonable to favor institutions that
foster the development of people likely to support democratic institutions and able to
function effectively in a democratic environment. Among the traits most students of
the subject consider essential are the ability to process and communicate complex
information, to make collective decisions, and the capacity to feel empathy and
solidarity with others. As we have seen, markets may provide a hostile environment

for the cultivation of these traits. Feelings of solidarity are more likely to flourish
where economic relationships are ongoing and personal, rather than fleeting and
anonymous; and where a concern for the needs of others is an integral part of the
institutions governing economic life. The complex decision-making and information
processing skills required of the modern democratic citizen are not likely to be
fostered in either markets or in workplaces that run from the top down.

Second, markets empower those with greater ability to extract rewards
at the expense of those "less able" to do so. By concentrating
economic and therefore political power in the hands of a few, markets
work to the comparative advantage of the more "able," and therefore,
of those who are likely to be more powerful in the first place. If the
more powerful party succeeds in appropriating more than 50 percent
of the benefits of an exchange, as will generally occur, the exchange
further disempowers the less powerful party and further empowers the
more powerful party. In the next round of exchange, the deck is
stacked a little more, and so on, ultimately leading to wide disparities.

Those who deceive themselves (and others) that markets nurture
democracy ignore the simple truth that markets tend to aggravate
disparities in economic power. Advocates focus on the fact that the
spread of markets can undermine traditional elites. This is certainly
true, but it does not prove that power will be more evenly spread and
democracy enhanced. If new and more powerful obstacles replace old
obstacles to economic democracy and participation, we are not moving
forward, or at most are barely doing so. If the boards of directors of
multinational corporations and banks, the free market policemen at the
World Bank and the IMF, and the adjudication commissions for
international treaties like NAFTA and MAI are more effectively insulated
from popular pressure than their predecessors were, the cause of
democracy is obviously not served, even though some old obstacles
have been pushed aside.

But there is more to be said. Markets have class implications just as
central planning does. Consider a workplace in a market economy:
even without private ownership and profit-seeking for owners, the firm
must compete for market share and reduce costs and raise revenues in
pursuit of surpluses to invest. If it fails in the competition for surpluses
relative to other firms in its industry, it will lack funds to invest and will
steadily decline in assets and eventually go out of business. Therefore
survival in a market system, even in the absence of private ownership,
requires pursuit of surplus. A key component of pursuing profit or
surplus is reducing labor costs and extracting more work from those
employed. But this is not uncontested. Workers, of course, all other
things being equal, prefer the opposite goal: higher wages and better
conditions.

So imagine a workplace in a market economy. Typically, there is a
broad corporate division of labor between conceptual workers making
decisions and overseeing and disciplining the workforce, and rote
workers carrying out orders given to them by their superiors. Given the
remuneration scheme of markets, the employees with empowering
work and decision-making prerog- atives will earn more and enjoy
better conditions than those who merely carry out orders. More,
because of this disparity, the empowered group will be in position to
largely implement its own schemes and defend its position to do so,
also seeing themselves as worthy to do so. These people do not opt to
reduce their own incomes or worsen their own work conditions (though
in an economy with capitalists, the capitalists may try to do this to
them) in order to reduce workplace costs. Instead, they force the rote
workers to accept lower wages and worse conditions.

Now imagine that this same workplace has removed such divisions of
labor. By whatever means, all workers earn according to effort and
sacrifice and enjoy equally empowering and fulfilling work conditions.
By the rules of the workplace they may share equally in sensible,
informed decision-making. However, their workplace exists in a
market, and as a result they must compete with other firms or go
bankrupt.

In this context, assuming that they reject bankruptcy, they have two
broad choices: they can opt to reduce their own wages, worsen their
own work conditions, and speed up their own levels of work, which is a
very alienating approach that they are not very emotionally or
psychologically equipped to undertake. Or, they can hire managers to
carry out these cost-cutting and output enlarging policies while
insulating the managers from feeling the policies' adverse effects by
giving the managers better conditions, higher wages, etc. In practice,
very predictably, the latter is what occurs. Even ignoring their
remunerative implications, markets therefore have a built-in pressure
to organize a work force into two groups: a large majority that obeys
and a small minority that makes decisions, with the latter enjoying
greater income, power, and protection from the adverse effects of the
cost-cutting decisions they will impose on others.

In other words, the information, incentive, and role characteristics of
market systems subvert the rationale for workers to take initiative in
workplace decisions even if they have the legal right to do so. For
example, worker's councils in the old Yugoslavia had the right to meet
and make decisions over all aspects of their economic activities, but
why should they? Market competition created an environment in which
decision-makers had no choice but to maximize the bottom line. Any
human effects that did not bear on costs and revenues had to be

ignored or else risk competitive failure. Workers' councils motivated by
qualitative human considerations would ultimately fail, thus putting out
of work the very people the councils were intended to empower. Since
competitive pressures have adverse effects on workplace satisfaction,
it is perfectly sensible for workers' councils in market environments to
hire others to make the decisions for them. The pattern is simple: first,
worker attention to and desire for self-management erodes. Next,
workers hire managers who in turn hire engineers and administrators
to transform job roles according to the dictates of market competition.
Even in the absence of private ownership, a process that begins with
workers choosing to delegate technical and alienating decisions to
experts who are insulated from the negative effects of those decisions,
ends up by increasing the fragmentation of work, bloating managerial
prerogatives, and substituting manager's goals—or, perhaps more
accurately, market goals—for those of workers. It is not long before a
burgeoning managerial class of "coordinators" begins to increase the
proportion of the surplus earmarked for themselves and to search for
ways to preserve their own power.

Even beyond generating income inequalities, which would be more
than bad enough, by creating a class division and elevating the
conceptual workers whom we call coordinators to positions dominating
workers who do the more rote and obedient tasks, markets empower
some folks disproportionately at the expense of others, and create
conditions that permit these coordinators to parlay their power into
grabbing still more income for themselves. Obviously all this creates
opposed interests and destroys solidarity.

Efficiency

Increasing the value of goods and services produced and decreasing
the unpleasantness of what we have to do to get them are two ways
producers can increase profits in a market economy. Competitive
pressures drive producers to do both, a situation which is sometimes
desirable, as, for example, when it leads to innovations in methods of
production. But generally undesirable is the maneuvering to
appropriate a greater share of the goods and services produced by
externalizing costs such as pollution, and competitive market
pressures drive producers to pursue this route to greater profitability
just as assiduously as any other. The problem is that, while the first
kind of behavior often serves the social interest as well as the private
interests of producers, the second kind of behavior does not. When
buyers or sellers promote their private interests by avoiding
responsibility for costs of their actions and pushing them onto those

who are not party to the market exchange, as with generating pollution
and not cleaning it up, their behavior introduces a misallocation of
productive resources and a consequent decrease in the overall value of
goods and services produced.

The positive side of market incentives has received great attention and
admiration, starting with Adam Smith who used the term "invisible
hand” to characterize it. He meant, of course, that competitive
pressures to profit induce many efficiency increasing choices, such as
employing more productive technologies and guiding actors to seek
more productive and less expensive options. The darker side of market
incentives has been neglected and underestimated. Two modern
exceptions are Ralph d'Arge and E.K. Hunt, who coined the less famous
but equally appropriate concept, "invisible foot" to describe the
socially counter-productive behavior of foisting costs onto others that
markets also promote.

Market advocates seldom ask: Where are firms most likely to find the
easiest opportunities to expand their profits? How easy is it to increase
the size or quality of the economic pie and thereby accrue more? How
easy is it to reduce the time or discomfort that it takes to bake the pie,
thereby accruing more? Alternatively, how easy is it to enlarge one's
slice of the pie by externalizing a cost or by appropriating a benefit
without payment, even if the overall size or quality of the pie declines
as a result? Why should we assume that it is infinitely easier to expand
one's own profits through socially productive behavior that increases
the size of the pie than through socially unproductive or even counter¬
productive behavior that actually reduces the size of the pie? Yet this
implicit assumption lies behind the view that markets are efficiency
machines.

Market advocates fail to notice that the same feature of market
exchanges primarily responsible for making business easy to
undertake—the exclusion of all affected parties but two from a
transaction—is also a major source of potential gain for the buyer and
seller. When the buyer and seller of an automobile strike their mutually
convenient deal, the size of the benefit they have to divide between
them is greatly enlarged by externalizing the costs onto others of the
acid rain produced by car production, as well as the costs of urban
smog, noise pollution, traffic congestion, and greenhouse gas
emissions caused by car consumption. Those who pay these costs and
thereby enlarge car-maker profits and car-consumer benefits are easy
marks for car sellers and buyers because they are geographically and
chronologically dispersed and because the magnitude of the effect of
each specific transaction on each of them is small and varies widely
from person to person. Individually the mass of folks who are

separately affected each have little incentive to insist on being party to
the transaction. Collectively they face formidable obstacles to forming
a voluntary coalition to effectively represent a large number of people,
each of whom have little and different amounts at stake. Nor is the
problem solved by awarding victims of external effects a property right
not to be victimized without their consent. Moreover, making markets
perfectly competitive or making the cost of entering a market zero
(even if either were realistically possible) would not eliminate the
opportunity for this kind of rent-seeking behavior.

That is, even if there were countless perfectly informed sellers and
buyers in every market, even if the appearance of the slightest
differences in average profit rates in different industries induced
instantaneous self-correcting entries and exits of firms, and even if
every economic participant were equally powerful and therefore
equally powerless—that is, even if we fully embraced the utterly unreal
fantasies of market enthusiasts—as long as there were numerous
external parties with small but unequal interests in market
transactions, those external parties would face much greater obstacles
to a full and effective representation of their collective interest than
the obstacles faced by the buyer and seller in the exchange. And it is
this unavoidable inequality in their ability to represent their own
interests that makes external parties easy prey to rent-seeking
behavior on the part of buyers and sellers.

Moreover, even if we could organize a market economy wherein every
participant were as powerful as every other and no one ever faced a
less powerful opponent in a market exchange—another ridiculous
fiction—this would still not change the fact that each of us has small
interests at stake in many transactions in which we are neither buyer
or seller. Yet the sum total interest of all these external parties can be
considerable compared to the interests of the two who are presumably
the most affected—the buyer and seller. It is the difficulty of
representing the collective interests of those with lesser individual
interests that creates an unavoidable inequality in power, which, in
turn, gives rise to the opportunity for individually profitable but socially
counter-productive rent-seeking on the part of buyers and sellers.

But of course the real world bears little resemblance to a hypothetical
game where it is impossible to increase one's market power so that
there is no reason to try. Instead, in the real world it is just as rational
to pursue ways to increase one's power vis-a-vis other buyers or sellers
as it is to search for ways to increase the size or quality of the
economic pie or reduce the time or discomfort necessary to bake it. In
the real world there are consumers with little information, time, or
means to defend their interests. There are small innovative firms for

giants like IBM and Microsoft to buy up instead of tackling the hard
work of innovation themselves. There are common property resources
whose productivity can be appropriated at little or no cost to the
beneficiary as they are over-exploited at the expense of future
generations. And there is a government run by politicians whose
careers rely mainly on their ability to raise campaign money, begging
to be plied for corporate welfare programs financed at taxpayer
expense.

In short, in a realistic world of unequal economic power the most
effective profit maximizing strategy is often to maneuver at the
expense of those with less economic power so as to re-slice the pie
(even while shrinking it) rather than to work to expand the pie. And of
course, the same prevails internationally as US-based economist
Robert Lekachman points out with eloquent restraint:

Children and economists may think that the men at the head of our great
corporations spend their time thinking about new ways to please the customers or
improve the efficiency of their factories and offices. What they actually concentrate
on is enlisting their government to protect their foreign and domestic interests.

In any case, leftist advocates of markets concede that externalities
lead to inefficient allocations and that non-competitive market
structures and disequilibrating forces add additional sources of
inefficiencies. And they also concede that efficiency requires policies
designed to internalize external effects, curb monopolistic practices,
and ameliorate market disequilibria. But there are also many
significant failings of markets that market admirers do not concede,
and their sum total importance is undeniable.

1 External effects are the rule rather than the exception.

As E. K. Hunt explained:

The Achilles heel of welfare economics is its treatment of externalities ....When
reference is made to externalities, one usually takes as a typical example an upwind
factory that emits large quantities of sulfur oxides and particulate matter inducing
rising probabilities of emphysema, lung cancer, and other respiratory diseases to
residents downwind, or a strip-mining operation that leaves an irreparable aesthetic
scar on the countryside. The fact is, however, that most of the millions of acts of
production and consumption in which we daily engage involve externalities. In a
market economy any action of one individual or enterprise which induces pleasure or
pain to any other individual or enterprise constitutes an externality. Since the vast
majority of productive and consumptive acts are social, i.e., to some degree they
involve more than one person, it follows that they will involve externalities. Our table
manners in a restaurant, the general appearance of our house, our yard or our
person, our personal hygiene, the route we pick for a joy ride, the time of day we
mow our lawn, or nearly any one of the thousands of ordinary daily acts, all affect, to

some degree, the pleasures or happiness of others. The fact is externalities are
totally pervasive.

2 There are no convenient or reliable procedures in market
economies for estimating the magnitude of external effects.

This means that accurate correctives, or what economists call
"Pigouvian" taxes, after the British economist Arthur Pigou (1877-
1959), are hard to calculate even in an isolated market. Any hope of
accurately estimating external effects in market economies lies with
actors' willingness to accept damage surveys which have well-known
biases and discrepancies that can be exploited by special interests.

And the fact that estimates derived from willingness to accept damage
surveys are commonly four times as high as estimates derived from
willingness to pay surveys is hardly comforting, when, in theory, they
should be roughly equal. Suffice to say, this problem is another thorn
in the side of markets.

3 Because they are unevenly dispersed throughout the industrial
matrix, the task of correcting for external effects is even more
daunting.

In the real world, where private interests and power take pre- cedence
over economic efficiency, the would-be beneficiaries of accurate
corrective taxes are usually dispersed and powerless compared to
those who would have to pay such taxes. This makes it unlikely that
full correctives would be enacted—even if they could be accurately
calculated.

4 Because consumer preferences are at least partially affected by
the economy—the technical term for which is that they are
endogenous—the degree of misallocation that results from predictable
under-correction for external effects will increase, or "snowball" over
time.

As noted earlier, people are affected by their economic conditions and
activities and they will learn to adjust their preferences to the biases
created by external effects in the market price system. Consumers will
increase their preference and demand for goods whose production
and/or consumption entails negative external effects but whose market
prices fail to reflect these costs and are therefore too low; and will
decrease their preference and demand for goods whose production
and/or consumption entails positive external effects but whose market
prices fail to reflect these benefits and are therefore too high. In short,
we adjust ourselves to benefit from what we see to be systematic
bargains and to avoid what we see to be systematic scams. While this

adjustment is individually rational to take advantage of market biases,
it is socially irrational and inefficient since it leads to greater demand
for the goods that the market already wrongly overproduces, and
lowers demand for the goods the market already under produces.
Morever, because the effects of this phenomenon are cumulative and
self-enforcing, over time the degree of inefficiency in the economy will
grow.

The upshot of these points is that the invisible foot operates on a par
with the invisible hand. The degree of allocative inefficiency due to
external effects is significant. Hope for "Pigouvian" correctives is a
pipe dream. Relative prices predictably diverge ever more widely from
accurate measures of full social costs and benefits as consumers
adjust their endogenous preferences to individually benefit from
inevitable market biases. In sum, convenient deals with mutual
benefits for buyer and seller should not be confused with economic
efficiency. When some kinds of preferences are consistently under¬
represented because of transaction cost and free rider problems
(wherein folks get the benefit of public goods without paying for them),
when some resources are consistently over- exploited because they
are common rather than private property, when consumers adjust their
preferences to biases in the price system, and when profits or
surpluses come as often from greater power as greater contribution,
theory predicts free market exchange will result in a misallocation of
resources. And when markets are less than perfect (which they always
are), and fail to reach equilibrium instantaneously (which they always
do), the results will be that much worse.

While markets are currently widely praised, perhaps before moving on
we should point out that we are not markets' only detractors. Consider
the US Nobel Prize-winning economist Robert Solow's observations
that:

Few markets can ever have been as competitive as those that flourished in Britain in
the first half of the nineteenth century, when infants became deformed as they toiled
their way to an early death in the pits and mills of the Black Country. And there is no
lack of examples today to confirm the fact also that well-functioning markets have no
innate tendency to promote excellence in any form. They offer no resistance to
forces making for a descent into cultural barbarity or moral depravity.

Or US Nobel Prize economist James Tobin's observation that:

The only sure result [of free market Reaganomics] ... are redistribution of income,
wealth, and power—from government to private enterprises, from workers to
capitalists, and from poor to rich.

Or US novelist Edward Bellamy's (1850-1898) observation that:

According to our ideas, buying and selling is essentially anti-social in all its
tendencies. It is an education in self-seeking at the expense of others, and no society
whose citizens are trained in such a school can possibly rise above a very low grade
of civilization.

Or, arch marketeer US Nobel Prize-winning economist Milton
Friedman's recent observation that:

The greatest problem facing our country is the breaking down into two classes, those
who have and those who have not. The growing differences between the incomes of
the skilled and the less skilled, the educated and the uneducated, pose a very real
danger. If that widening rift continues, we’re going to be in terrible trouble. The idea
of having a class of people who never communicate with their neighbors—those very
neighbors who assume the responsibility for providing their basic needs—is
extremely unpleasant and discouraging. And it cannot last. We'll have a civil war. We
really cannot remain a democratic, open society that is divided into two classes. In
the long run, that's the greatest single danger.

A summary of our findings regarding market inefficiencies is that the
cybernetic, incentive, and allocative properties of markets involve a
pervasive bias against discovering, expressing, and developing needs
that require social rather than individual activity for fulfillment. Markets
do not provide concrete information about how people's decisions
affect the life prospects of others or vice versa. They do not even
provide accurate summaries of the social benefits and costs associated
with what people decide to do since markets mis-evaluate external
effects—and external effects are the rule rather than the exception.
Actual market allocations under supply social goods and activities and
over supply individual goods and activities. They establish incentives
for individuals to wean themselves of needs that require socially
coordinated intercourse and accentuate needs that can be met
individually. Moreover, markets reward competitive behavior and
penalize cooperative behavior.

In sum, markets not only erode solidarity, they also systemat- ically
mis-charge purchasers so that over time, preferences that are
individually rational for people to develop combine with biases inherent
in market allocations to yield outcomes increasingly further from those
that would have maximized human fulfillment. And to top it off,
markets generate gross economic inequality, severely distorted
decision-making influence, and class division and rule. In the end, the
fears of "utopian" critics who decry the socially alienating effects of
markets prove more to the point than the assurances of so-called
"scientific" economists that markets are ideal allocation institutions.
Regarding markets, abolitionism is an appropriate attitude.

Capitalism

Capitalism employs private ownership and markets. It remunerates
property, power, and output, and, as a result, has produced some of
the widest disparities of income and wealth found in human history.

The division of labor within capitalism is hierarchical. Capitalists rule
workers while coordinators occupy the terrain between labor and
capital, partly administering on behalf of capitalists and partly trying to
enlarge their own interests at the expense of both capitalists above
and workers below.

Within this broad rubric there is certainly variation. Workers may or
may not have unions and other forms of organization to aid in
manifesting their preferences—and the same can be true for the
coordinator class that may have amassed greater or lesser means of
accruing wealth and power unto itself at the expense of either
capitalists or workers. At its most oppressive, there is the cut-throat
capitalism of robber barons with gigantic, unrestrained corporate
power dominating all social choices and options. At its least
oppressive, there is an ameliorated system of capitalism called social
democracy in which laborers and consumers have considerable local
and state power and use it to ward off the worst outcomes of markets
and private ownership.

In any case, the basic model called capitalism because of its intrinsic
tendencies of private ownership of means of production, hierarchical
corporate divisions of labor, and competitive markets, not only doesn't
facilitate solidarity, diversity, equity, and participatory self¬
management, it violates each of these values producing virtually the
exact opposite. As the tremendously influential British Nobel economist
John Maynard Keynes (1883-1946) put it:

[Capitalism] is not a success. It is not intelligent, it is not beau- tiful, it is not just, it is
not virtuous—and it doesn't deliver the goods. In short, we dislike it, and we are
beginning to despise it. But when we wonder what to put in its place, we are
extremely perplexed.

Reducing that perplexity occupies much of this book.

Market Socialism

Market socialism is the widely used name for a system that utilizes
markets, a hierarchical or corporate division of labor, remuneration
according to output, and either social, public, or state ownership of
means of production.

Market socialism, in our view, improves on capitalism by eliminating
private ownership and thus the capitalist class. But in market socialism
we see, instead, that the coordinator class rises in stature and power,
utilizing its relative monopoly on intellectual labor and on decision¬
making bearing on their own work and the work of their subordinates
to attain a ruling position. Capitalists are gone and thus the most
significant factor leading to income differential is gone, but there is still
class division and class rule. There is still the alienation, misallocation,
and immoral bases for remuneration intrinsic to markets, and there is
still a division of labor that relegates most actors to greater tedium
than warranted, reserving for a relative few greater power and reward.

One can imagine a range of variations in such economies, of course.
The balance of power between coordinators and workers could shift. If
workers accrued more power, they could enact structural reforms to
ameliorate the ills of markets, reallocate wealth, etc. If coordinators
accrued more power, they could enact the reverse. The system's
internal market dynamics promote the latter. Courageous struggle
promotes the former.

Clearly, however, whatever gains over capitalism have been achieved
in attaining market socialism, market socialism still is not an economy
that by its intrinsic operations promotes solidarity, equity, diversity,
and participatory self-management while also accomplishing economic
functions efficiently. Instead, all the intrinsic ills of markets—
particularly, hierarchical workplace divisions, remuneration according
to output and bargaining power, distortion of personality and motives,
and mispricing of goods and services, etc.—persist, while only the
aggravating presence of private capital is transcended.

Is this economic system aptly called socialism? If we call it "socialism,"
then the word can't simultaneously mean rule by workers over their
own labors, because that is certainly absent in this system. If we do
not call this system "socialism," then we fly in the face of popular
labels and of the name for their aim chosen by the advocates of the
system. The deciding factor in this tension for me, after some years of
ambivalence, is that too many perfectly reasonable people associate
the label "socialism” with this model and with associated centrally
planned models to make trying to disentangle the label from the
systems worthwhile. It seems to be more instructive and productive

1 to make clear that these systems are class-divided and
coordinator-ruled,

2 to make clear how a preferred system differs from them, and

3 to leave behind the label socialism as a positive descriptor of what
we desire so as to avoid guilt by association and related confusions.

And that's why the economy featured in this book is called
"participatory economics."

Centrally Planned Socialism

Centrally planned socialism replaces the market allocation of market
socialism with central planning. Having discussed this allocation
institution we know that the result will be quite mixed. Depending on
how the central planning apparatus arrives at data, and the harshness
of its regime, we will have more or less authoritarianism and more or
less means for planners and other intellectual workers in the
coordinator class to propel their own interests over and above the
interests of workers.

But however the chips fall regarding the exact balance of power and
the institutional forms of a centrally planned economy, the
continuation of hierarchical divisions of labor and remuneration
according to power, and the imposition of even more starkly
authoritarian command and associated personality structures
guarantee that such a system will not deliver solidarity, diversity,
equity, and participatory self-management. It will be "socialist" only by
self-designation and popular usage. Nonetheless, the system will deny
those doing the labor and consuming the outputs proper say in the
decisions that affect their lives and proper remuneration for their
efforts and sacrifices.

Green Bioregionalism

Green bioregionalism is a system whose characteristics are quite
vague. Many green activists quite reasonably reject capitalism,
markets, and authoritarianism—much as we do in this book and for
rather similar reasons. Somehow, however, their additional perfectly
reasonable and essential idea that an economy and society should
attain ecological sustainability leads some of them—and this is where a
strange jump occurs—to a notion that local material self-sufficiency is
a primary virtue.

Sustainability is certainly unobjectionable. What is the alter- native,
after all? Is there anyone who would argue that we should organize

ourselves to promote dissolution of our societies due to depletion of
their means of existence? Surely everyone of all persuasions has to
agree that ecological sustainability is desirable, the alternative being
suicide. But then what does self-sufficiency mean? Or bioregionalism?

For some of its advocates bioregionalism seems to mean that in any
sensibly demarcated region, economic and social activities should
respect the biological and ecological character of the region, consistent
with creating a sustainable and fulfilling existence. That seems fair
enough and is obviously desirable. But for other advocates
bioregionalism seems to mean that each bioregion should only
undertake activities that are made possible by the resources and
ecological attributes it contains. Its economy must use what resources
are directly available in the region, and not depend on inputs from
other regions. This seems, in contrast to the earlier sensible
formulation, quite misguided.

First, what is ecological about separating each region from all others?
The core concept of ecology is arguably interconnection and mutual
dependence. For this reason, it is hard to understand why some
greens, otherwise so attuned to ecological logic and values, think there
is a virtue—much less an ecological imperative—in creating self-
sufficient rather than mutually dependent relations among regions.
Second, some regions naturally have more plentiful resources and
desirable ecologies for humans than others, and no single region can
offer all the benefits that can be generated by sensible attention to
balanced utilization and sharing of resources from all regions. So why
should we eliminate the benefits of sharing ecological bounty across all
borders? We cannot find any reason to forego such benefits unless one
argues that mutual interaction intrinsically breeds ecological
devastation. But why should that be if we use means of mutual
interaction that are ecologically sensitive (and rule out markets)?

What has all this got to do with green bioregionalism? Well, for us it is
hard to evaluate it as an economic system without raising these points
because to evaluate it as an economy we have to specify its
component economic institutions. Some greens advocate a localized
community economy, with small work units and no major allocation
institutions other than direct interpersonal barter. They often seem to
favor equitable roles and incomes, including no hierarchies in decision¬
making influence or job quality. Flowever, they provide no explanation
of how to accomplish these desirable aims. Instead, there is an implicit
presumption that such admirable results would flow inexorably from
the logic of small size and self-sufficiency. Yet this belief has neither
historical nor logical basis. Indeed, in contrast, the only thing that
necessarily flows from bioregionalist self-sufficient aspirations and

small size is a needless dissolution of social ties, a harsh inequality of
resources, and a self-negating rejection of economies of scale.

When green bioregionalists react to such criticisms, they say: "Oh sure,
of course, we don't mean that people in the desert have to suffer
compared to people in areas with great climates and plentiful
resources. Who would favor such unfairness in life?" But then when
asked how the bounty of the latter finds its way, in part, into the hands
of the former, they have no answer... and in our view the green
bioregionalist now confronts an economic decision. Do I want markets,
or do I want central planning, or do I want some other allocation
mechanism to mediate this transfer? It is our view that if they opt for
either of the first two allocative means they will wind up with either
market or centrally planned socialism/coordinatorism. Their vision will
incorporate class division and class rule and will lose the qualities they
aspired to, including proper attention to the ecology in relation to
human well-being and the capacity to sensibly relate to broader
ecological dictates having to do with the rights of other species—as
well as rejection of hierarchy in work conditions, assertion of mutual
empowerment, and attainment of equitable distribution of
circumstances and incomes. On the other hand, if Bioregionalists wish
to retain all these values and to also facilitate the diverse ecological
realities of countless regions, then they will have to adopt a suitable
economic vision for those goals—which is not accomplished by
favoring an a priori dissolution of inter- connectedness or prioritization
of self-sufficiency.

The final point we would like to make about bioregionalism is the even
more extreme one that ubiquitous smallness and self- sufficiency are
not only not in every case necessary or sufficient for a good economy,
but that taken by themselves they are not even always ecological
values or values of any desirable sort at all.

To say that an economy should prioritize small structures, or assemble
itself into regions subsisting without benefit of interaction, opts for
such choices even when they are contrary to worthy values and
themselves convey nothing positive. It would be sensible for greens to
demand that a good economy should take proper account of the full
ecological implications of economic choices, and should help people
make choices in light of these implications. It would make sense to
demand that an economy permit sensible choices of scale in light of
ecological and social implications, not prejudging one way or the other.
When dealing with workplaces, living units, industries, and pretty much
every type of institution and social structure, sometimes larger is
better, sometimes smaller, whether ecologically, or to achieve face to
face relations, or for many other reasons. Similarly, it would make

sense to demand that an economy not dissolve relations of mutual
benefit and support among regions or exaggerate their potentials
either, but, instead, allow ecologically proper and materially just and
beneficial flows from region to region. Sometimes it makes sense for
resources, goods, and services to flow freely even over large distances,
sometimes not. The point is that an economy should not make such
choices a priori, but provide workers and consumers the needed
information and appropriate decision-making influence to collectively
arrive at desirable choices, as conditions and opportunities arise.

We have come to the end of this chapter and to the end of part one of
this book and have arrived at the positive questions that motivate the
rest of our exploration. Can we specify a new type of economy that
facilitates solidarity, diversity, equity, and self-management, and that
gets desirable economic functions done without imposing costs that
offset its benefits in ways that we find too onerous?

If yes, then we have a new economic vision we can truly celebrate. If
no, then we either keep trying or we will have to choose from among
the horribly flawed models we have already discussed— forcing
ourselves to settle for the one we find least evil.

Having shown that existing economic options impede the values we
hold dear, we desire a new and better vision. Espousing good values,
as in earlier chapters, is a part of going forward. But a serious
alternative vision must delineate new institutions with different
properties than those we now endure. These new institutions should
accomplish production, allocation, and consumption at least as well as
institutions found in capitalism, market socialism, centrally planned
socialism, and bioregionalism. But the new institutions should not
induce class divisions nor produce the rule of one class by another.

And they should enhance rather than obstruct equity, diversity,
solidarity, and self-management. To accomplish these ends we are
going to propose a system called participatory economics.

A New Vision

Participatory economics, or "parecon" for short, has as its central
institutional and organizational components:

• social rather than private ownership

• nested worker and consumer councils and balanced job
complexes rather than corporate workplace organization

• remuneration for effort and sacrifice rather than for property,
power, or output

• participatory planning rather than markets or central planning

• and participatory self-management rather than class rule.

Taken together the above structures define participatory economics as
a separate and new economic model—one that we believe meets our
norms for a good economy.

From our earlier discussion of economics, various economic
institutions, and various economic systems, we already know that in a
desirable economy each worker and consumer should have equal
access to information regarding the full social effects of proposed
actions on themselves and throughout the economy. They should
influence decisions in proportion as the decisions affect them. They
should share one another's successes and suffer one another's
hardships so that the daily functions of economic life enhance rather
than destroy solidarity. A good economy's incentives, information, and
circumstances should foster empathy and mutual concern. A good
economy's economic activity should diversify opportunities and paths
people can choose, rather than homogenizing them. A good economy's
workers should be justly remunerated for their labors in accord with
the actual effort and sacrifice they expend on behalf of the social
product, or, if they cannot work, in accord with social averages and
special needs. A good economy's division of labor should respect and
advance people's diverse preferences at the same time that it
promotes solidarity and facilitates self-management. Class divisions
should not be produced, either by ownership or different circumstances
of production or consumption. All in all, a good economy should
accomplish central economic functions and meet people's needs and
develop their potentials in accord with our highlighted values and
without ill effects on other values we also hold dear.

In Part II, therefore, we will describe participatory economics, focusing
on its defining institutions and their implications for workers and
consumers. In the concluding parts three and four of the book we will
explore daily life circumstances in parecon and address criticisms of
pa recon.

Describing an entire economic system one step at a time is a bit
problematic: half a suspension bridge is worthless; the same holds for
half an economic system. The new meaning and viability of each part
of a good economy can only be fully evident when we take into
account its interactions with the new economy's other parts. So as you
read the rest of this book, please keep in mind that we will
occasionally, and of necessity, allude to features that will not be fully

described until later. Each chapter in the coming section will only
partly explain the full meaning and implications of what is introduced.
Full clarity comes only when we can situate each new structure in
proper relation with all other new features. Please finish all the
chapters and see the mutually dependent implications of all
component parts before you fully judge any one of them.

Part II:

Participatory Economic Vision

There is no reason to accept the doctrines crafted to sustain power and privilege, or
to believe that we are constrained by mysterious and unknown social laws. These are
simply decisions made within institutions that are subject to human will and that
must face the test of legitimacy. And if they do not meet the test, they can be
replaced by other institutions that are more free and more just, as has happened

often in the past.
— Noam Chomsky

If you think you are too small to make a difference, try sleeping in a closed room with

a mosquito.
—African Proverb

Sometimes anti-capitalist economic vision offers markets or central
planning plus public or state ownership. Not here. Sometimes anti¬
capitalist vision is a very broad and general presentation of inspiring
values and aims, basically a collection of exalted adjectives, with little
institutional substance. You will not find that here, either. The next five
chapters deal with social ownership of productive assets, self¬
managing worker and consumer councils, balanced job complexes,
remuneration for effort and sacrifice, and participatory planning—the
five defining components of participatory economics. Two chapters
then offer a summary of the parecon model and evaluate it.

Chapter 4

Ownership

An apt and true reply was given to Alexander the Great by a pirate who had been
seized. For when that king had asked the man what he meant by keeping hostile
possession of the sea, he answered with bold pride. "What thou meanest by seizing
the whole earth; but because I do it with a petty ship, I am called a robber, whilst

thou who dost it with a great fleet art styled emperor.

— St. Augustine

There has to be a shortest and simplest chapter in every book. This is
ours. Alone among chapters in this section it consists almost entirely of
negation rather than positive envisioning. It is also trivially simple but
nonetheless essential.

In every economy there are tools, workplaces, resources and other
means of production with which we combine our efforts to produce
new items for consumption. Historically, having a few members of
society own these means of production, decide on their use, and
dispose over the output and revenues they generate has meant that
this privileged group has always had more wealth, more income, and
more economic power than others in society. There are owners and
non-owners. The non-owners may as a group have further categories
of differentiation, but this does not complicate the current issue. By
separating ownership from non-ownership of the means of production,
society places some of its members on top and other below. Our
commitment to equity, solidarity, diversity, proper distribution of
influence, and classlessness precludes all this. So what is our
alternative?

There are two issues:

• No one should have disproportionate say due to having a
different relationship to owning means of production than
anyone else.

• No one should have excessive income, nor for that matter,
should anyone receive anything other than remuneration
according to effort and sacrifice, or, if unable to work, according
to need. Never should anyone's income be correlated to their
owning means of production.

There is a simple logical step we can take to accomplish both these
aims most quickly and easily. We simply remove ownership of the
means of production from the economic picture. We can think of this
as deciding that no one owns the means of production. Or we can think

of it as deciding that everyone owns a fractional share of every single
item of means of production equivalent to what every other person
owns of that item. Or we can think of it as deciding that society owns
all the means of production but that it has no say over any of the
means of production nor any claim on their output on that account.

In short, we simply remove ownership of the means of production as
an economic consideration. Property in the form of means of
production becomes a non-thing. It has no bearing in a participatory
economy. No one has any ownership of means of production that
accrues to him or her any rights, any responsibilities, any wealth, or
any income different from what the rest of the economy warrants for
him or her. No one has wealth, income, or economic influence different
than what anyone else has due to having different ownership of means
of production. It is not just that ownership of the means of production
changes hands from what we now know. It doesn't move from one set
of actors to some other set. In a participatory economy ownership of
the means of production no longer even exists as a concept. It is
banished, and with it goes the category "capitalist." No one is
distinguishable from anyone else by having different ownership of
means of production. There is no separate concept of such ownership,
and therefore no class of owners, and therefore no capitalists—nor is
there any sector of folks acting as agents for others in administering
means of production through the state. The whole idea and dynamic
are gone.

Of course, this is not a full economic description of an alternative to
private ownership, by any means. We cannot just negate and remove
and call what remains something new. It is one needed step in arriving
at something new, but not the total picture. Means of production are
no longer owned in a participatory economy, but we still have to worry
about the allocation of means of production to different production
processes and about dispensation over the use of means of production.
It is just that we have to do this having removed ownership from the
equation, and we thus have to come up with an alternative to some
people having deeds to this or that factory, assembly line, coal mine,
and so on. As to how we accomplish this, that comes to light in the
next few chapters.

5

Councils

The only possible alternative to being the oppressed or the oppressor is voluntary

cooperation for the greatest good of all.

— Errico Malatesta

Economics is conducted by and for workers and consumers. Workers
create the social product. Consumers enjoy the social product. In these
two roles, mediated by allocation, people conduct economic life.

To do their jobs responsibly, workers ought to consider what they
would like to contribute to the social product, both by their own efforts
and in association with those they work with. They ought to address
how to combine their efforts and the resources and tools they access
to generate worthy outputs that other people will benefit from. They
ought to be directly in touch with the dynamics of production and with
its implications for themselves and others. And they ought to weigh
their direct understanding of their production situation and preferences
about it against their choices' implications for those who consume their
product.

To enjoy output responsibly, in contrast, consumers ought to consider
what they would like to have from the social product, either as
individuals or in collective association with their family, neighbors, or
others. They ought to address what to ask for to advance their lives as
best they can in tune with the effects their choices will have on the
people producing their outputs. They should directly assess their own
desires and the conditions under which they live. They should closely
consider the likely implications for their personal development of the
various possible consumption choices they might make. They should
weigh the implications of benefits of their consumption activities
against the adverse effects those activities may have on those who will
do the required work.

Coming chapters address very closely how workers and consumers
receive the information they need, what incentives they have for their
choices, and what income they get to use for their consumption. But
here we address the prior question, in what local structures are
workers and consumers organized?

Historically, in times of economic upheaval, it has been very common
for workers and consumers to organize themselves into collective
bodies for the purpose of influencing economic outcomes. These
bodies have most often been called workers' and consumers' councils,
and we adopt that name as well to describe the vehicles through which
people in a participatory economy manifest their economic preferences

and in which they determine and carry out most of their daily
economic activities.

Workers' Councils

Every participatory economic workplace is governed by a workers'
council in which each worker has the same overall decision making
rights and responsibilities as every other. When necessary, smaller
councils are organized for work teams, units, and small divisions.

Larger councils are organized for divisions, whole workplaces, and
industries.

Given a workplace's overall agenda, how the people in a work group
organize themselves affects almost exclusively themselves— so they
function as a unit vis-a-vis that decision. And the same happens at
diverse levels, from teams and projects though units and divisions up
to larger councils for whole workplaces, industries, and even for
workers as a whole. Different-sized councils address different issues in
accord with the norm that decision-making input should be
proportionate to the impact of decisions on those who make them.

Council decisions are sometimes one-worker-one-vote majority rule,
but in cases where that system would yield equal input for all council
members in making decisions that actually have very unequal impact
on each of them, councils employ different procedures with different
degrees of consensus required for resolution, different actors
participating, and so on. By leaving decisions that overwhelmingly
affect a subset of workers overwhelmingly to only those workers and
their councils, by assigning most initiative in decisions to those most
affected by those decisions, and by weighing or otherwise organizing
voting procedures to reflect the differential impacts of voting outcomes
on those who will be affected by the decisions, workers' councils
collectively fashion their own best approximations to self-management
(a point we shall deal with in more detail as we proceed).

Of course neither conceiving nor agreeing on the most appropriate
participation and voting system, much less on decisions themselves,
will be free of dispute within actual workers' councils. Nor will any
single approach to arriving at conclusions be univer- sally applicable.

To understand what workers do in their councils, what incentives and
motives they have, what information they use, and what decisions they
undertake, requires that we have a better understanding of diverse
other institutions of participatory economics, and so must wait a few
chapters. But the key point here is that in a situation where each

worker has an interest in self- management, and no worker has
disproportionate power, it is not unreasonable to assert that workers'
councils will actuate decision-making structures and ways to delegate
responsibility that accord with self-management rather than with
unjust hierarchies of power. Or, we should better say, it is reasonable
to think this will be so, assuming that other facets of the economy
don't impose other norms, such as those that would be imposed by a
hierarchical division of labor or markets—but instead also further this
desirable aim.

Consumers' Councils

As with workers, the principal means of organizing consumers in a
parecon is consumer councils. Each individual, family, or other social
unit would comprise the smallest such councils and also belong to its
larger neighborhood consumption council. Each neighborhood council
would belong in turn to a federation of neighborhood councils the size
of a city ward or a rural county. Each ward council would belong to a
city consumption council (or perhaps a borough and then a city
council), and each city and county council would belong to a state
council, and each state council would belong to the national council (or
maybe to a regional and then to the national council). This nested
federation of democratic councils would organize consumption, just as
the nested federation of democratic workers' councils organizes
production.

Participatory economies incorporate this nesting of different
consumers' councils to accommodate the fact that different kinds of
consumption affect different groups of people in different ways. The
color of my shirt concerns me and my most intimate acquaintances.
The shrubbery on my block concerns all who live on the block, though
perhaps some more than others. The quality of play equipment in a
park affects all in the neighborhood. The number of volumes in the
library and teachers in the high school primarily affect all in a ward.

The frequency and punctuality of buses and subways affect primarily
all in a city. The disposition of waste affects all states in a major
watershed. "Real" national security affects all citizens in a country, and
protection of the ozone layer affects all humanity—which means that
my choice of deodorant, unlike my choice of shirt color, directly and
primarily concerns more than just me and my intimates.

Failure to arrange for all those affected by consumption activities to
participate in choosing them not only implies an absence of self¬
management, but, if the preferences of some are disregarded, also a

loss of efficiency in meeting needs and developing potentials. It is to
accommodate the full range of consumption activities, from the most
private to the most public, that we organize different "levels" of
consumption councils. As to how consumers get necessary information
about product availability and indeed influence the choice of what is
made available, and as to how they then make their own choices, with
what budget, and in what ways—for both individual and collective
consumption—we must wait until we have described more of the
overall structure. But what we can say now is that once we recognize
that consumption activity, like production activity, is largely social, we
must insist that consumption decision-making, like production
decision-making, be participatory and equitable. In that event it is
reasonable to conclude that consumption councils will be one valuable
component in the mix that accomplishes that aim.

Consensus?

As we prepare this book, in mid-2002, many economic activists are
deeply committed to "consensus decision-making.” They rightfully
celebrate its lack of hierarchy, its mutual respect, and its openness.
Critics of consensus decision-making, however, claim it is horribly
inefficient in many venues and can be abused because it gives too
much power to single actors who can prevent consensus from being
attained. Actually, the use of consensus as a tool of left dissent and
ensuing debate is not new. These emerged—or more accurately re-
emerged—approximately thirty-five years ago in the early New Left,
and then had a large boost during the anti-nuclear activism of the
1980s, and now again at the turn of this new century.

Participatory economics does not institutionally prejudge what
procedures should be used for decisions made in workplace or
consumer councils. It does not say you have to use majority rule or
consensus or any other particular procedure. It could be that in a real
parecon, workers and consumers opt for consensus decision-making all
the time, much of the time, or rarely. That is a choice for them. What
parecon prescribes is that people should ensure, as best they are able
without investing excessive time and energy, that each actor has an
impact on outcomes in proportion to how much he or she is affected.

As potential participants in a participatory economy, however, do we
ourselves think it would make sense for workers and consumers to
conduct all their decisions via consensus? No. We think consensus
makes very good sense for some decisions, but not for others. There
are two key but quite different aspects to consensus decision- making

that bear on this perspective. One is about process. The other is about
formal power.

The process of consensus decision-making, circa 2002, emphasizes
respect for all parties and the use of diverse methods of information
preparation and dissemination and subsequent discussion and
exchange to ensure that each person's input is appropriately accessed
and addressed. It is important to realize, however, that techniques for
how information is gathered and addressed are one thing, and for how
power is allotted are another. That is, the same methods of being sure
that information gets out, preferences are expressed, issues are
addressed, etc., as are used in contemporary consensus decision¬
making can be utilized when decisions are being made by one-person-
one-vote majority rule, or by one-person-one-vote two-thirds needed
for a positive outcome, or by other norms. Indeed, it would probably
simplify debate about these matters if we had two concepts or names:
one for the method of mutual discussion and information exchange, we
could call this participatory preparation, and one for requiring
unanimous consent, which we could call consensus.

At any rate, the second component of contemporary consensus
decision-making is that for a decision to be settled, all must agree with
it or at least refrain from blocking it. Each actor has a veto they can
employ. The theory is that people (whether individually or in groups)
will not veto options unless the impact of the choice on them is so
great that they ought to have the right to block it. In other words, the
implicit and sometimes explicit logic of consensus decision-making is
that it permits each person to determine, relative to the others, the
degree to which they are affected, and to then submit or withhold their
expressions of opposition in accord with their best estimate of their
own situation relative to the reported preferences and situation of
others. If one actor or a group together among the people making a
decision is sufficiently affected that they believe their rejection of the
decision should dominate the outcome, then he, she, or they will
oppose or block it. If they do not like it, but they do not think they
should dominate the choice, then they will abstain or otherwise avoid
blocking it. In this sense, when used as intended by actors who are
attuned and respectful of one another, consensus decision-making
works perfectly. Only individuals or subgroups that dislike an outcome
and would be in sum sufficiently affected by it to warrant dominating
the outcome, will opt to impede decisions. Working thusly, when
consensus decision-making fails, imperfections derive not from having
established an inflexible and inappropriate procedure for making
decisions, but due to mis-estimates of each other's feelings or the
impact felt, or to abuses of the unfolding process by individuals in the
group. So the question becomes, how likely are we to have good

interaction and outcomes rather than problematic ones, and are the
prospects for the latter low enough, in all contexts, to warrant using
consensus all the time? Or do the prospects differ for different
situations and decisions, so that in some cases using other approaches
will be more likely to yield the best results with the least hassle?

Consider hiring a new worker for a small workplace, or adding one to a
small work team. Suppose we collectively assess this type of recurring
decision in our workplace and decide that in light of who we are, the
time we have for this type of decision, our general situations relative to
decisions of this type, etc., this is a situation where the impact on each
person of a choice to hire someone that they don't like is huge,
whereas the impact of hiring someone they do like on any actor is
much less. Everyone has to work in close proximity with a new person
day in and day out, and if anyone really doesn't like him or her, that
will potentially be a far more serious problem for that person than it is
a plus that everyone else favors the hire.

So in our workers' councils, we decide that for each new hire to our
small workplace where everyone works in close proximity and knows
one another well, everyone involved is entitled to a veto. The voting
guideline might be that you need three quarters to approve someone
for that person to be hired, but that anyone who is strongly enough
opposed can block any proposed hire no matter how many others favor
it. The voting rules aren't reworked for every new hiring situation, but
nor do they imply a universal rule that applies to all other types of
decision. Instead, this is a pre-agreed rule specifically about hiring
decisions.

And note, it is chosen because it makes life easier, not harder, in that it
approximates most closely what we generally think will be appropriate
input for each person involved and thereby reduces the complexity of
arriving at the desired result once we begin our deliberations. The
person who is highly upset over a new hire doesn't have to convince
everyone of the validity of her concern and get them to vote her way
as well. She is concerned, period. She doesn't have to explain why. She
gets a veto because being strongly opposed to hiring trumps favoring
hiring. There is no need for everyone to engage in fancy mutual
calculations to decide if they have the right to trump, though of course,
as with any procedure, we can include diverse methods for
communicating feelings, etc.

But suppose we had instead adopted a one-person one-vote majority
rule approach to hiring decisions. Now the person who feels her life
would be made miserable by the new person's entry must convince a
majority of others to respect her strong feelings and vote her way. If

she fails, her strong feelings will not have their appropriate impact on
the final decision.

Something interesting characterizes the above comparison. In this
particular type of decision, it turns out that the consensus approach
(not the communications methods but the voting system itself) can
yield proper results even with less mutual empathy and less
communication of preferences and compromise than simple majority
rule voting would entail. In this case it is the one-person one-vote
approach that would fail to yield the appropriate influence for each
actor, unless, due to an extensive process of discussion, the actors
mediated very constructively on behalf of one another.

The lesson is clear. Good process is always good to have, of course,
though one can spend more time on communication and mutual
exploration than warranted by a decision's importance. But different
decision procedures will put more or less weight on having a perfect
process and will arrive at better or worse representations of the
proportionate will of the actors involved more or less quickly and more
or less easily. Some might achieve proportionate say almost
automatically as compared to others achieving it only with great
difficulty and due to very precise jockeying by each actor in light of
knowledge of the others' views and willingness to bend toward their
stronger preferences. The irony is, if consensus advocates want to say
that consensus is good because it forces actors to mediate their
choices in accord with their mutual assessments of one another rather
than merely consulting their own preferences, then they should in fact
opt for one-person-one-vote majority rule, not consensus, for a
decision like hiring. The second irony is, this would precisely reverse
the type of logic that we think a council should employ in choosing
decision procedures.

In our view the upshot is that the processes we settle on to prepare
for, debate, and finally make decisions should be chosen to maximize
an appropriate level of give and take, exploration, and mutual
understanding, as well as appropriate influence for the importance of
the decision and the time available. Communication should not be
coerced by choosing a procedure that will fail miserably if
communication falls short of optimal forcing people to spend more
time deliberating than another procedure would require. In other
words, the voting procedure used in decisions should approximate as
closely as we can arrange to directly facilitating proportionate say, so
that if the supporting process doesn't work perfectly the procedure is
least distorted by the communicative inadequacies.

Those who favor using consensus all the time presumably feel, instead,
that we should opt for the approach that so demands good process
that we must expend great effort in having good process all the time,
or we will get horrible results. For that matter, the folks who advocate
ubiquitous use of one-person-one-vote majority rule are presumably
saying something like, let's have a middle of the road orientation. But
why should we have any single orientation at all? Sometimes one
procedure is better, other times a different one is better. Why prejudge
the choice universally, as compared to settling it differently, if
appropriate, for each different venue?

The differences between always favoring consensus or favoring one-
person-one-vote majority rule or some other option, or favoring
different procedures for different situations, are not simple to see,
experience shows. So let's consider a different kind of decision, to
clarify a bit more.

Let's say we have to make choices about investment options in a
workplace. We might imagine workers in a workers' council considering
a consensus approach for this type of decision but opting against it,
because in application it would be cumbersome and any errors could
easily lead to harmful outcomes. For investment, non consensus
procedures would be easier to enact and less likely to diverge from
optimal choices due to errors or bad faith by anyone involved.

For example, suppose there is a proposal to put in a new heating
system. After discussion there needs to be a decision. With a
consensus approach anyone can block a choice for any reason, but if
you are considering doing so, how do you know whether you have the
moral right, given the scale of the decision's relative impact on you, to
block it or not? In the context of the debate you have to decide
yourself if it is warranted for you to veto a choice given the intensity of
your feelings and those of others. With a relatively few trusting people
and enough time, and with thorough information flow, consensus may
be optimal, but without these features working nearly perfectly, using
consensus for this type of decision is asking for trouble.

With that in mind, workers might decide it is better to prejudge that in
cases of investment choices they should opt for the abstract approach
that each worker gets a vote and majority rules, but also allow any
strongly dissenting minority to put off a decision for further discussion,
at least twice. The point is, the workers might decide that something
other than consensus (which allows for individual veto) comes closer to
correct apportionment of influence and for that reason leaves the
actors less difficulty in choosing to moderate or to strongly express
their preferences to attain proper proportionate input for all.

Now, nothing is perfect. So (to make the point graphically), suppose
there is a worker who will die if the temperature goes down to 68
degrees but is fine at 70 and above. Obviously, with consensus he will
have no problem manifesting his intense preference even if the mutual
exchange of information is faulty. In the one-person- one-vote majority
rule approach, for the decision to come out properly the debate (or
perhaps overarching rules about disabilities) needs to to give that
person his extra due. But the view of a group opting for majority rule
for investment decisions is that the degree of sensitivity required for
the chosen approach when deciding investments and the harm that
errors due to poor process will most often be less than the degree of
sensitivity required and the harm that would arise from errors were the
algorithm for investment decisions consensus.

The point of all this is to see that decision-making procedures and
communication methods are flexible and not goals in and of
themselves. They are a means to the desired end of proportionate,
informed, participatory, and efficient influence. It follows that we
should be principled about the goals, but not about the means.

Something that emerges from this is that in all modes of decision¬
making, if everyone operates ideally after a full exchange of relevant
information and feelings, they will reach ideal decisions. Perfect
process plus perfect people plus any decision-making system at all
yields perfect decisions.

Consider the case of decision-making by a single leader. The leader
hears everybody, calculates all impacts and preferences perfectly, and
decides the perfect outcome, incorporating into her choice each actor's
will in proportion to how they will be affected by the outcome. In a one-
person-one-vote majority rule framework everyone has access to the
same information and is able to freely express themselves, then
modulate their vote so that the sum of all yeas and nays is
appropriate. Or, of course, this same thing occurs in a consensus
framework, with each person coordinating their choice to advocate or
to block an outcome in light of impact on self and on others.

In other words, in any setup, if all the actors are able as a result of a
free exchange of information and feelings to determine perfectly
accurately their own relevant input and that of all other actors, and
then in hearing the preferences of the others, if each actor decides
accurately and justly whether those in the overall yea camp should
carry the day and if yes maintains their yeas and if not rescinds them,
all choices will come out ideally and unanimously, regardless of the
voting procedure used.

In this sense, assuming our norm of self-management, in any system
the abstract situation is identical. That is, those involved have to
assess feelings, preferences, and information, and then decide what to
do to collectively reflect every actor's cumulative will in accord with
the norm that decision-making input should be in proportion as one is
impacted. In all cases, with perfect process and choice, final dissent or
assent is not solely a singular decision based on one's own feelings but
depends on whether those assenting or dissenting see their joint
appropriate influence level as warranting their choice. If so, they
persist in it. If not they retire from it.

So is it just convention that determines which system we use for
settling outcomes, the only important consideration being the process
of exchange of information, feelings, and preferences, and the
willingness of actors to support and respect one another's depth of
feeling and opinion in pursuit of proper proportionate influence for
each? No. Instead, in the real world it makes sense to prejudge certain
types of decisions and decide that they would best be handled with
certain decision-making processes, and not to rely on continually
reassessing each, or, even worse, on using some fixed approach for
everything. Why?

The primary reasons for preferring a flexible approach are:

1 It is desirable to come as close as one can to determining in
advance how best to give each person involved in a decision
appropriate impact on it, so that the need for each actor to bend their
expressed vote in light not only of their own preferences but the
preferences others have is minimized and the entire process is
simplified. And it is also a truism that no one can know my interests as
well as I do—unless I'm a child or deranged.

2 It is desirable to minimize the extent to which any actor can
inappropriately distort decisions from ideal proportionate say whether
whether this is due to honest mistakes, preset biases, or even
dishonest manipulations.

We do not always opt for having a perfect communication process plus
the smartest and most perceptive person present making the final
decision unilaterally, or for a randomly chosen person doing so—and
surely no consensus advocate would favor this. But why not? It
involves as good a pre-vote process as we can muster. And if we say
that by such processes everyone always arrives at perfect estimates of
their own and all other people's proper input, then everyone is in
position to make the right decision. So why not let anyone do it? Well,
we do not do that for four very good reasons.

1 It is not true that everyone is always going to accurately know
everyone else's situation perfectly, nor that they could, and obstacles
can be a matter of benign lack of under- standing or less benign self-
interest and bias.

2 Even if people did know everyone else's desires and the relative
impact of all options under consideration, it is not true that everyone
will always behave honorably.

3 By having the ultimate decision made by one person, whether he
or she is randomly chosen or otherwise, there is no record of dissent
from the decision. We just have the ultimate yea or nay. We have no
lasting feeling for or permanent record that we can consult of the
existence of a minority and its views, and there is no tendency to
empower the minority to try other alternatives or even to remember
that the minority exists, should difficulties with the decision emerge
down the road.

4 In practice, we know unilateral decision-making would devolve into
steadily reduced participation and a divergence from real self¬
management.

But this rejection of one person making the final decision by fiat tells
us that different approaches have different merits for different
situations, which is why parecon does not prejudge how decisions
should be made, but only the broad norm or goal regarding self¬
managing input and participation.

We like to think advocates of consensus favor it precisely because if
there has to be only one method elevated above all others they are
seeking the method that will at least in modest-sized groups most
promote participation and permit the emergence of appropriate
influence. Our response to this is that there doesn't have to be only
one approach, and there shouldn't be.

So the bottom line for this chapter, however complex the diverse cases
and their specific logic can turn out to be, is simple. To facilitate and
organize worker and consumer decision-making in keeping with the
goal of self-management, parecon incorporates councils at diverse
levels, from the smallest work team or family to the largest industry or
state, and beyond. The actors involved need appropriate information
and need to be properly confident, empowered, and skilled. They
should utilize decision-making procedures and communication
methods in their councils as they see fit, adapting these as best they
can to the time and hassle involved and to the possibilities for error
and abuse, and seeking to attain appropriately informed decision-

making influence in pro- portion to the degree each person is affected
by decision-making outcomes.

6

Job Complexes

As it happens, there are no columns in standard double-entry book-keeping to keep
track of satisfaction and demoralization. There is no credit entry for feelings of self-
worth and confidence, no debit column for feelings of uselessness and worthlessness.
There are no monthly, quarterly, or even annual statements of pride and no closing
statement of bankruptcy when the worker finally comes to feel that after all he
couldn't do anything else, and doesn't deserve anything better.

— Barbara Garson

We have established that workplaces should be organized and run by
workers' councils and that these councils will also be the vehicle
through which workers manifest their preferences regarding how long
they wish to work, what they wish to produce, what tools and methods
they wish to use, and so on. We have said that workers in their
councils at various levels from small teams to whole industries will
have appropriate say. But, there is a wrinkle to work out. What does it
mean to suggest that an assembly worker toiling at a repetitive task all
day, a financial executive overseeing workplace information and
budgeting, and a manager overseeing the activities of dozens of rote
workers, should have equal say in the activities of the company for
which they all work?

Not all tasks are equally desirable, and even in a formally democratic
council, if some workers do only rote tasks that numb their minds and
bodies, and other workers do engaging and empowering tasks that not
only brighten their spirits and attentiveness, but also provide them
with information critical to intelligent decision-making, saying that the
two should have equal impact on decisions denies reality. Democratic
councils help create conditions that enable participation and give
people appropriate impact over decisions, but something more is
needed to equalize daily work assignments vis-a-vis the impact
people's work experience has on their capacity to participate and
render informed judgments. If some workers have consistently greater
information and responsibility in their jobs, they will dominate
workplace decisions and in that sense become a ruling "coordinator
class,” even though they operate in democratic councils and have no
special ownership of the workplace.

Parecon's antidote to corporate divisions of labor imposing class
division is that if you work at a particularly unpleasant and
disempowering task for some time each day or week, then for some
other time you should work at more pleasant and empowering tasks.
Overall, people should not do either rote and unpleasant work or
conceptual and empowering work all the time. We should each instead
have a balanced mix of tasks.

This does not say that every person must perform every task in every
workplace. The same person need not work as a doctor, an engineer,
and a literary critic, much less work at every imaginable task
throughout an economy. Those who assemble cars today need not
assemble computers tomorrow, much less every imaginable product.
Nor should everyone who works in a hospital perform brain surgery as
well as every other hospital function. The aim is not to eliminate
divisions of labor, but to ensure that over some reasonable time frame
people should have responsibility for some sensible sequence of tasks
for which they are adequately trained and such that no one enjoys
consistent advantages in terms of the empowerment effects of their
work.

We do not mean that we have doctors who occasionally clean bed
pains, nor secretaries who every so often attend a seminar. Parading
through the ghetto does not yield scars and slinking through a country
club does not confer status. Short-term stints in alternative
circumstances—whether slumming or admiring—do not rectify long¬
term inequities in basic responsibilities. We do mean, instead, that
everyone has a set of tasks that together compose his or her job such
that the overall implications of that whole set of tasks are on average
like the overall implications for empowerment of all other jobs.

Further, for those doing only elite work in one workplace to do only
rote work in another would not challenge the hierarchical organization
of work in either one. We need to balance job complexes for
desirability and empowerment in each and every workplace, as well as
guarantee that workers have a combination of tasks that balance
across workplaces. This and only this provides a division of labor that
gives all workers an equal chance of participating in and benefiting
from workplace decision-making. This and only this establishes a
division of labor which does not produce a class division between
permanent order-givers and order-takers.

Since disparate empowerment at work inexorably destroys
participatory potentials and creates class differences, while differences
in quality of life at work could be justly offset by appropriate
remuneration, we will focus more on empowerment for the rest of this

chapter. In practice, there probably is not much difference since
balancing empowerment likely takes us a long way toward balancing
quality of life, and in any event, broader issues will resurface as we
proceed in other chapters.

To start, almost everyone is aware that typical jobs in familiar
corporate contexts combine tasks with the same qualitative
characteristics so that each worker has a homogenous job complex
and most people do one level of task. In contrast, seeking appropriate
empowerment, a participatory economy offers balanced job complexes
where everyone typically does many levels of tasks. Each parecon
worker has a particular bundle of diverse responsibilities, and each
person's bundle prepares him or her to participate as an equal to
everyone else in democratic workplace decision-making.

This might be a good time to point out that in part III of this book we
include considerable daily life detail, including describing hypothetical
workplaces and consumer units, to illustrate the nuts and bolts of
possible implementations of participatory economics. Even more
description is available online at www.parecon.org. In this chapter, it is
only the essential abstract character of the matter that we highlight.

At any rate, we hope the idea is starting to crystalize. With a typical
capitalist approach to defining jobs we can imagine someone listing all
possible tasks to be done in a workplace. We can then imagine
someone giving each task a rank of 1 to 20, with higher being more
empowering and lower being more deadening and stultifying. So in this
experiment we have hundreds or perhaps even thousands of stripped-
down tasks from which we create actual jobs. No single task is enough
to constitute a whole job. Some jobs may take only a few tasks, some
many. When the corporate approach is adopted, each defined job is a
bundle of tasks, but each task in that bundle has very nearly the same
rating as all the others. As a result, the corporate job bundle may come
up with a 1, a 7, a 15, or a 20 as its average empowerment rating. The
average could be any number on the scale, but the job itself will be
comprised of a fairly homogenized bundle of tasks all rated about the
same. In other words the job will be pegged to a position in a 1 to 20
hierarchy and all its component tasks will be at that rank or just a bit
above or below. Rose gets mostly 5s, some 4s and 6s. Robert gets
mostly 17s, some 16s and 18s.

Now suppose we switch to the participatory economic workplace.

There are quite a few differences in tasks due to the transition to a
new type of economy, for reasons to be discovered as we proceed, but
still it is a long list. The tasks are of course still differentiated in terms
of their empowerment effects, just as in the capitalist economy and we

again rank each one of them from 1 to 20 (though there are fewer at
the low end than before). However their combination into parecon jobs
changes dramatically. Instead of combing a bunch of 6s into a 6 job,
and a bunch of 18s into an 18 job, every job is now a combination of
tasks of varied levels such that each job in the workplace has the same
average grade. Maybe the workplace is a coal mine and the average is
4 or maybe it is a factory and the average is 7 or it is a school and the
average is 11 or it is a research center and the average is 14.

Whatever the average for the unit is, everyone who works there has a
job whose combination of tasks yields the same average. In the coal
mine, where the average is 4, jobs may have tasks that are all rated 4,
or maybe a job has some 7s, 4s and 2s but it averages to 4. In the
research plant someone may have all 14s, or maybe a 4 and 5, a
bunch of 13s, 14, and 15s, and a 19 or 20. The point is that every
worker has a job. Every job has many tasks. The tasks are suited to the
worker and vice versa, so the tasks combine into a sensible agenda of
responsibilities. The average empowerment impact of the sum of tasks
in any job in any workplace is the same as the average empowerment
for all other jobs in that workplace. When the workers come together in
their workers' councils, whether for work-teams, units, divisions, or the
whole workplace, there is no subset of workers whose conditions have
prepared them better and left them more energetic or provided them
greater relevant information or skills relative to everyone else, such
that they will predictably dominate debate and outcomes. The
preparation for participation owing to involvement in the daily life of
the workplace is essentially equalized. Of course, in real circumstances
the procedures of job balancing are not precisely as we describe above
but involve a steady meshing and merging of tasks into jobs, with
workers grading the overall combinations and bringing these into
accord with each other by tweaking the combinations far more fluidly
than parceling out all tasks as if from some gigantic menu. But the
graphic image conveys the relevant reality.

Now, whether having balanced job complexes is efficient or not,
whether it can get economic functions completed with a high level of
competence or not, and whether it is compatible with the other
institutions of a participatory economy or not, are all matters that have
to wait until we have provided a more complete picture of the overall
system. But what should be clear already is if it turns out to be
preferred and desirable, there is no law of nature or of "job definitions”
that precludes doing as we have suggested to a reasonably high
degree of attainment of the end sought. Of course it cannot be perfect.
There is no perfect grading of tasks, no perfect meshing of graded
tasks into balanced jobs, and thus no perfect balancing. This is a social
dynamic enacted by human beings in complex circumstances. But
short of perfection, we can easily balance job complexes in each

workplace quite well, tweaking the results over time to get an ever
more just allocation. Still, even recognizing that we could achieve this,
and even assuming efficiency and compatibility with the rest of the
economy (to be addressed later), there is a problem.

We should add a clarification to avoid a possible confusion. Balancing
empowerment across jobs is not the same as balancing the amount or
type of intellect required for that job. That is, if you do some highly
abstract theoretical physics that only two other people on Earth can
understand, your activity is not necessarily immensely more
empowering than my helping decide how we can best build
automobiles or when the chef at a restaurant decides how to best cook
a meal. If it were simply a question of intellect, then arguably no
amount of balancing is going to get me and Hawking equalized.
Thinking about unified fields requires too much intellect to balance. But
when we are talking about empowerment, there are empowering tasks
in all kinds of workplaces, including those that involve figuring out how
to best do other jobs, how to best satisfy consumers, how to plan for
the future, etc., and thinking about elementary particles or cosmic
black holes actually is not all that socially empowering.

In balancing job complexes within each workplace for equal
empowerment, the goal was to prevent the organization and
assignment of tasks from preparing some workers better than others
to participate in decision-making at that workplace. But balancing job
complexes within workplaces does not guarantee that work life will be
equally empowering across workplaces. One workplace could average
out at 7, another at 14, to use the hypothetical example from earlier,
or at 3 and 18, for that matter. In such cases, those in the more
empowering industries would be far better able to manifest their
preferences throughout the broader economy. Indeed, over time, they
could further polarize workplaces in the economy, with a subset of
workplaces housing all the most empowering jobs and with the least
empowering work ghettoized off into (huge) disempowering and menial
workplaces—with the former of course overseeing and ruling the latter.
Since this is obviously not our aim, we deduce that establishing
conditions for a truly participatory and equitable economy requires
cross workplace balancing in addition to balancing within each
workplace.

The only way to balance for desirability and empowerment (or even for
either alone) across workplaces is to have people spend time outside
their primary workplace offsetting advantages or disad- vantages that
its average may have compared to the overall societal average. If you
work in a coal mine that is a 4, and society is a 7, you get to work
considerable time outside the mines in another venue, raising your

average to 7. If you work in a research facility that is a 13 in a society
whose average is a 7, you would have to work outside that facility a
considerable chunk of each week at rather onerous tasks to get down
to the overall average of 7. How does a participatory economy
calibrate these balances? For that matter, how do people wind up
working in a particular workplace in the first place?

Though the full answer requires a full picture of a participatory
economy, including its means of allocation, we cannot reasonably go
any further regarding job complexes without providing at least some
clarification. In a participatory economy, everyone will naturally have
the right to apply for work wherever they choose, and every workers'
council will have the right to add any members they wish (using
appropriate decision-making methods, of course). We have no choice
but to wait until after describing participatory allocation to analyze
when and why workers' councils would wish to add or release
members, but for now it is sufficient to know that once the economy
has a work agenda for the coming period, each workers' council may
have a list of openings for which anyone can freely apply. So any
worker could apply for any opening and move to a new workers'
council that wants them should they prefer it to their present council.

In this respect, parecon job changing is superficially like changing jobs
in a typical capitalist economy. But while the situation looks a bit like a
traditional labor market, it is ultimately quite different. First, in a
traditional labor market, people generally change employment to win
higher pay or to enjoy working conditions generally considered more
desirable, not solely conditions they themselves prefer. But since a
parecon balances job complexes across as well as within workplaces,
and since it remunerates effort and sacrifice (as we will soon describe),
people will be unable to attain these traditional goals by changing
workplaces. Instead, everyone already will have average job quality
and income conditions, and thus also an instance of the best available
income and job conditions. On the other hand, if a person would prefer
a different group of workmates, or working at a different combination
of tasks due to his or her personal priorities and interests, of course
she or he might have a very good reason to apply for a new job,
perhaps even at a new workplace. However, to the extent that job
complexes are balanced and pay is for effort and sacrifice only,
personal reasons will be the only motives to move. Conversely,
people's freedom to move to other workplaces will provide a check on
the effectiveness of balancing job complexes across workplaces.

Higher pay will not be available by changing jobs, nor will objectively
better work conditions, since pay and conditions will be balanced.

Just as workers must balance jobs internally in each workplace through
a flexible rating process (whose exact character would vary from
workplace to workplace), so will delegates of workers from different
councils and industries develop a flexible rating process to balance
across workplaces. As one plausible solution, there could be "job
complex committees" both within each workplace and for the economy
as a whole. The internal committees would be responsible for
proposing ways to combine tasks and assign work times to achieve
balanced work complexes within workplaces. The economy-wide
committees arrange positions for workers in less desirable and less
empowering primary workplaces some time in more desirable and
more empowering environments, and vice versa. Within a workplace, it
would become clear that more fine-tuning of job assignments was
required when more and more or fewer and fewer members of a
workers' council apply for one job or another. Similarly, the need for
better balancing of conditions and job complexes across workplaces
becomes evident the same way; that is, through excessive (or
minimal) applications to switch to one workplace or another.

It should be clear that creating perfectly balanced job complexes is
theoretically possible. But can it be done in real life situations? Of
course not. We are not talking about pure geometry nor even the
engineering of plastics. We are talking about people and social
arrangements. But the point is, it can be done quite well, with
deviations and errors being only deviations and errors, not systematic
biases. Over time errors will not multiply or snowball, but will instead
be corrected. And most important, the entire process is democratic.
There is no elite that bends everyone else to their will and each person
winds up in circumstances collectively agreed upon by procedures
respecting their appropriate input. If we combine our best effort at
creating balanced job complexes with well-designed democratic
councils, we attain a venue favorable to non-hierarchical production
relations that will promote equity and participation and will facilitate
appropriate voting patterns. Still, you may reasonably wonder, in
practical real world situations, could workers really rate and combine
tasks to define balanced job complexes within and across workplaces
even reasonably well, much less very well as we suggest?

Provided we understand that we are talking about a social process that
never attains perfection, but that does fulfill workers' own sense of
balance, the answer is surely yes.

The idea is that workers within each workplace would engage in a
collective evaluation of their own circumstances. As a participatory
economy emerged from a capitalist or a market or centrally planned
socialist past, naturally there would be a lengthy discussion and debate

about the characteristics of different tasks. But once the first
approximation of balanced complexes within a workplace had been
established, regular adjustments would be relatively simple. For
example, if the introduction of a new technology changed the human
impact of some tasks, thereby throwing old complexes out of balance,
workers would simply move some responsibilities within and across
affected complexes to re-establish desirable balance, or they might
change the time spent at different tasks in affected complexes, to
attain that new balance.

The new balance need not and could not be perfect, just as the old one
wasn't, nor would the adjustments be instantaneous, nor would
everyone be likely to agree completely with every result of a
democratic determination of combinations. And of course individual
preferences that deviate from one's workmates preferences would
determine who would choose to apply for which balanced job complex.
If I am less bothered by noise but more bothered by dust, I will prefer a
complex whose rote component is attending noisy machinery rather
than a complex with a sweeping detail. You may have opposite
inclinations.

In practice, balancing between workplaces would be a bit more
complicated. How would arrangements be made for workers to have
responsibilities in more than one workplace? Over time, balancing
across workplaces would be determined partly through a growing
familiarity with the social relations of production, partly as a result of
evaluations by specific committees whose job includes rating
complexes in different plants and industries, and partly as a result of
the pattern of movement of workers. That all this is possible within
some acceptable range of error and of dissent ought to be obvious.
Those wanting to see a more detailed description of the specific
division of tasks into jobs in and across some hypothetical workplaces
will have that chance in part III of this book, and can do so at the
parecon website (www.parecon.org), as well.

Basically, participatory economic job complexes would be organized so
that every individual would be regularly involved in both conception
and execution tasks, with comparable empowerment and quality of life
circumstances for all. The precision of the balance would depend on
many factors, and would improve over time. At any rate, no individual
would ever permanently occupy positions that would present him or
her unusual opportunities to accumulate influence or knowledge. Every
individual would be welcomed to occupy positions that guaranteed him
or her an appropriate amount of empowering tasks. In essence, the
human costs and benefits of work would be equitably distributed.
Corporate organization would be relegated to the dustbin of history,

with council organization and balanced job complexes taking its place.
The question that remains, of course, is whether—in concert with other
essential innovations of a participatory economy—employing balanced
job complexes would have as much positive impact for solidarity,
equity, diversity, and self-management as we seek, whether this would
permit effective utilization of talents and resources to produce desired
outputs, and also whether it would have other undesirable effects that
mitigated these virtues. We address these questions in upcoming
chapters.

Chapter 7
Remuneration

In a society of an hundred thousand families, there will perhaps be one hundred who
don't labour at all, and who yet, either by violence, or by the more orderly oppression
of law, employ a greater part of the labour of society than any other ten thousand in
it. The division of what remains, too ... is by no means made in proportion to the
labour of each individual. On the contrary those who labour most get least. The
opulent merchant, who spends a great part of his time in luxury ... enjoys a much
greater proportion of the profits ... than all the Clerks and Accountants who do the
business. These last, again, enjoying a great deal of leisure, and suffering scarce any
other hardship besides the confinement of attendance, enjoy a much greater share of
the produce, than three times an equal number of artisans, who, under their

direction, labour much more severely.The artisan again, tho' he works generally

under cover, protected from the injuries of the weather... and assisted by the
convenience of innumerable machines, enjoys a much greater share than the poor
labourer who has the soil and the seasons to struggle with, and, who while he affords
the materials for supplying the luxury of all the other members of the common
wealth, and bears, as it were, upon his shoulders the whole fabric of human society,
seems himself to be buried out of sight in the lowest foundations of the building.

— Adam Smith

How can a rational being be ennobled by
anything that is not obtained by its own exertion?

— Mary Wollstonecraft

What claim should each worker have on consumption goods, based on
their involvement in the economy? Earlier we discussed the logic and
morality of different approaches to defining and pursuing equity, and
arrived at the conclusion that if people are able to work they should be
remunerated for the effort or sacrifice they expend in contributing to
the social product, and if they are not able to work they should be
remunerated at some appropriate level based on social averages and

special needs. Everyone might also enjoy certain basic guaranteed
provisions—health care and education, for example—depending on
what the society democratically deter- mines it can afford.

This orientation establishes that no one should have claims on output
on the basis of owning some means of production. No one should have
claims on output on the basis of bargaining power. No one should have
claims on output on the basis that they put a larger sum into the social
product than others by using some special genetic endowment or
talent or size, or due to having some highly productive learned skill,
better tools, or more productive work- mates, or because they happen
to produce things that are more highly valued. Rather, each worker
should have a claim on output in proportion to the relative magnitude
of the effort or sacrifice that they expend in their socially useful work.

There is another angle from which we can see this. Why, if we believe
in equality, don't we give everybody one car, one tennis racquet,
seven plums, thirteen books (one by Jacqueline Suzanne, one by
Chomsky, etc.), and two green shirts? The answer, of course, is that
being equally deserving does not mean that people have the same
preferences. We want people to have the freedom to follow diverse
preferences, but equality does imply that people shouldn't draw more
from the public supply than anyone else. Okay, so what if I prefer
leisure time to an extra shirt? Shouldn't I be allowed to take my
"benefits" partly in extra time? Of course. Therefore, rewarding
according to effort is another way of saying that we are all rewarded
equally, but that some will choose shirts, some movies, some leisure or
less stressful or onerous time at work, and some saving for next year.

But are we sure what all this means? And, once sure, do we have any
idea how it can occur? Though we did address the meaning of the aim
when we highlighted our new values earlier, given how controversial
the approach is, it will not hurt to recapitulate its logic here. We will
then move on to the issue of implementation.

The Logic of Remunerative Justice

Private enterprise market (capitalist) economies distribute
consumption opportunities according to personal contribution to social
output plus the contribution of property owned, with large allowance,
in practice, for the impact of bargaining power. Public enterprise
market economies (market socialist or what we call "market
coordinatorist" economies) distribute consumption opportunities
according to personal contribution only, having removed ownership of

productive property from the equation, but with allowance, again, for
the impact of bargaining power.

We claim these approaches are inequitable in that they reward people
for what does not deserve reward (such as a deed in one's pocket,
advantageous circumstances, or special genetic endowment); mis-
reward people for things that do deserve reward if they are onerous
(such as training and education); and do not properly reward people
for what they have control over, are responsible for, and do merit
compensation for—that is, the pain and loss they undergo while
contributing to the social product. Contrary to these familiar norms of
remuneration, we propose that desirable economies ought to distribute
consumption opportunities only according to effort or sacrifice.

Whereas differences in contribution to output will derive from
differences in talent, training, job assignment, tools, luck, and effort, if
we define effort as personal sacrifice for the sake of the social
endeavor, only effort merits compensation. Of course effort can take
many forms. It may be longer work hours, less pleasant work, or more
intense, dangerous, or unhealthy work. It may consist of training that is
less gratifying than the training experiences others undergo or than
the work others do during the same period.

The implications of rewarding property as compared to output or effort
are pretty much self-evident. Bill Gates prospers tomorrow whether he
does anything in the form of work, and he prospers to a degree that
bears no relation whatever to what he (or any thousand humans) could
personally produce. But how can we more concretely understand the
difference between rewarding people for their actual personal
contributions to output, which is the lynchpin remunerative proposal of
most non-capitalist market models, and rewarding people only for their
effort/sacrifice, which is the lynchpin remunerative proposal for
parecon?

By all accounts, the musician Salieri was a dedicated, hard- working,
but plodding composer at the same time and in the same city as
Mozart, who was a frivolous, irresponsible, genius. Assume these
accounts are accurate. Assume also that both Mozart and Salieri could
best serve the social interest by working as composers. If we reward
output Mozart deserved to be paid thousands of times as much as
Salieri. If we reward effort/sacrifice, Salieri likely deserved more pay
than Mozart.

So here we have a possible test of ethical inclinations. Ignore questions
of incentives (a matter we will address shortly) and assume that
amount and quality of output would not vary whatever your answer is.

Also realize that you can listen to whomever you want, whatever your
answer is, and assume that both composers do work that is socially
valued enough for them to be paid for their musical pursuits. Would
you pay Mozart or Salieri more? Do you monetarily reward Mozart on
top of his fantastic luck in being born genetically endowed with special
talent? Or do you just pay him for effort, enjoying the fantastic bounty
it provides but not materially enriching him in accord with it? Do you
punish Salieri (relative to Mozart) because he has to work longer and
harder to produce a creditable composition? Or do you pay him for his
effort too, like everyone else, then enjoy the product—although not
nearly as much as you enjoy Mozart? We confront these options and
opt for remunerating effort/sacrifice, not output, for all the reasons that
we have offered in prior chapters. But how?

If in a parecon we had jobs more or less like the ones that exist now,
those doing the most onerous, harmful work would be highest paid;
those doing the most pleasant and intrinsically uplifting work would be
lowest paid—the opposite of the current condition. To achieve this goal
we would have to assess each job's characteristics for the effort or
sacrifice per hour expended at an average level of exertion, plus have
some means of oversight to keep track of which workers are expending
effort at levels above or below average.

But, a participatory economy wouldn't have jobs like now. Instead it
would have balanced job complexes and if we assume balance for
empowerment (which we must have, by the arguments of the last
chapter) and balance for quality of life effects as well, then each
worker has a job complex for their standard work week—let's say
thirty-hours—that is comparable to every other worker's. How much
claim on consumption does each worker then have?

Let's call the amount a worker earns for working at an average
intensity for him or her at a balanced job complex for thirty hours, the
base income. With everyone having balanced job complexes, each
worker will earn either the base income or some higher amount due to
having worked longer or more intensely, or some lower amount due to
having worked fewer hours or at below average intensity. Counting the
hours a person works is easy; more difficult will be measuring effort
expended.

The precise methodology for doing this need not be the same from
workplace to workplace. Adherence to the norm is what should be
universal, not a particular specific approach to the nuts and bolts of
implementation. Here is a general approach, however, that many
workplaces might opt for. Imagine each worker receives a kind of
"evaluation report" from their workplace that determines their income

to be used for consumption expenditures. This evaluation report would
indicate hours worked at a balanced job complex and intensity of work,
yielding an "effort rating" in the form of a percentage multiplier. If the
rating was one, the person's remuneration would be the social
average. If the rating was 1.1, a tenth more, if .9, a tenth less. What
explains a person getting higher or lower remuneration is having
worked more or less hours or at a higher or lower intensity of effort.

But who judges these differentials, and by what form of evaluation?
This would be the zone of variation from workplace to workplace. The
assessment could be a highly precise numeric rating system where
people are graded to two decimal places above or below average, for
example. Or it might simply read "superior," "average," or "below
average," with the designation meaning average income, or a tenth
above or a tenth below (that having been agreed in the workplace to
be the only variation permitted). Similarly, the judgment could be
made by a workplace committee (all members of which, of course,
have balanced job complexes) or instead by a vote of whole councils,
or by whatever other means the workplace opted for. (For those
wondering what prevents a whole workplace from exaggerating their
effort, regrettably, the full picture of parecon, as we warned at the
outset, depends on all institutions and their interactions. In this case,
allocation is also an essential factor, so the question must wait for next
chapter.)

One choice that might be prevalent is for a workplace to assume that
everyone works at an average intensity level so that for the most part
income will vary only with hours worked. The only exception to that, a
workplace could decide, is by petition to the council—either by a
person claiming to deserve more, or by workmates who are convinced
some person deserves less, each of which would, in this model, occur
only infrequently.

Another quite different choice many might make is to implement a
much tighter rating system that would yield a significant number of
employees getting various amounts more or less than average.

But the main point is that since circumstances and opinions will differ
regarding the best and most accurate means to calibrate effort and
how closely to do so, different workers' councils will likely opt for
different systems. And assuming different workplaces do opt for
different methods of work evaluation, workers would presumably make
this one of the factors to consider in selecting a job in the first place.
And, most important, however different various procedures might be,
they would surely not lead to extreme income differentials, since there
can only be so much variation in time worked and in intensity, even if

workplaces are very accommodating of different preferences on this
score.

Finally, we should clarify how a parecon will handle "free
consumption." Even in contemporary economies where there is little
solidarity, the public sometimes allows individuals to consume at public
expense on the basis of need. Since we believe one of the merits of an
equitable economy is that it creates the necessary conditions for
attaining humane economic outcomes, and since we incorporate
features designed to build solidarity in our allocative procedures, we
expect considerable consumption on the basis of need. This will occur
in two different ways.

First, particular consumption activities such as health care or public
parks will be free to all. This does not mean that they have no social
cost, or that they should be produced beyond the point where their
social costs outweigh their social benefits. But individuals will not be
expected to reduce their requests for other consumption activities
because they consume more of these free goods. On the other hand, of
course the average consumption per person will drop if society as a
whole consumes more free goods. For example, if we produce more
health care overall, we have less productive potential left for
everything else. Basically, everyone pays for free goods equally (in the
reduction of other output available), regardless of their direct
participation in consuming the free goods. This occurs on the
assumption that the benefits of the consumption are generalized, or
that (with medicine, say) the costs ought to be socialized rather than
penalizing those in need. What items should be on the free list is
something that will have to be debated in consumer federations, but
medical care is an obvious example.

Second, people will also be able to make particular requests for need-
based consumption to be addressed case by case by others in the
economy. Frequently, for example, individuals or collectives might
propose a consumption request above the level warranted by effort
ratings accompanied by an explanation of what they regard as a
justifiable special need. These requests are considered by relevant
consumer councils and either approved or rejected. If approved, the
costs would be spread over the population of the council approving.

Note that the above discussion of remuneration only describes how
parecon could remunerate in a just and equitable way. It does not
provide evidence or logic that doing so will elicit desired quality and
output or foster the values we favor, nor that there won't be negative
side effects mitigating benefits. In this chapter, the point was only to

present the option we favor. Later we shall assess it, and test it against
possible concerns.

Chapter 8
Allocation

Annual income twenty pounds, annual expenditure nineteen pounds and six, result
happiness. Annual income twenty pounds, annual expenditures twenty pounds ought

and six, result misery.
— Charles Dickens

The familiar notion of planning is that done by experts, with scientific knowledge. We
have seen the results of that rational planning: tower blocks, food additives, valium—

the list of horrors is endless.
— Sheila Rowbotham

In 1983 the British economist Alec Nove wrote an influential book titled
The Economics of Feasible Socialism. He argued to a surprisingly
receptive leftist audience that for economic allocation we could only
choose either markets or central planning, two systems that in this
volume we have already rejected. Nove summarized his argument":

It is clear that someone (some institution) has to tell the producer about what the
users require. If that someone is not the impersonal market mechanism it can only be
a hierarchical superior. There are horizontal links (market), there are vertical links
(hierarchy). What other dimension is there? In a complex industrial economy the
interrelations between its parts can be based in principle either on freely chosen
negotiated contracts (which means autonomy and a species of commodity
production) or on a system of binding instructions from planning offices. There is no
third way.

If Nove was right, we would have to go back and pick a lesser evil from
between markets and central planning, no other option being possible.
Our economic choice would then be limited to capitalism or to market
or centrally planned coordinatorism, with as many features as we could
impose to better the lot of citizens.

British Prime Minister and statesman William Pitt (1759-1806), an
otherwise unlikely cast member of this book, noted accurately and
succinctly, though in an entirely different context, that "Necessity is
the argument of tyrants. It is the creed of slaves."

We never knew Alec Nove. We are confident that he was no tyrant and
that he was no slave. Yet, despite its influence, it is hard to find in his
book any other rationale than the argument from necessity. Nove
notes that no links other than horizontal or vertical exist. But this
ignores that there may be means other than markets for horizontal
relations unless one assumes, by necessity, that markets are the only
horizontal allocation system possible. Nove asserts that there can be
no third way. Alternatives are logically impossible. But he gives no
reason why this must be so other than complexity. This is precisely
what Pitt means by "arguing from necessity."

Nove believes producers and consumers cannot together respectfully
arrive at "instructions” that they mutually carry out without any central
agency and without competition and commodity exchange, except
with horrible repercussions. But why can't it happen? Or why must
there be horrible repercussions?

Does Nove examine the properties that such a system might have and
find them wanting in comparison to class division, alienation, and
exploitation? Does he describe features that must accompany such a
system and show that they have consequences we cannot abide? He
does neither. Instead, the only answer Nove provides as to why
cooperative allocation cannot happen is that allocation is too complex
for anything other than markets or central planning to work. He offers
a negative proof—an alternative to markets or central planning is
impossible. Nove achieves his proof by simply stating that nothing
could fulfill complex allocation needs other than markets or central
planning. That is, his supporting logic is to simply state the result itself.
His only evidence is to pile up indications of what no one doubts in the
first place: that is, that allocation is complex and important. Nove's
presentation argues only from necessity. It must be that there is no
third way because it must be that there is no third way. We do not
have one now, therefore we cannot have one ever. With this mindset,
and this was part of Pitt's point, we would never have advanced
beyond the institutions of the Pharaoh's Egypt.

As Nove's claim, repeated by many others, is operationally very
important in communicating with various left audiences, let's back up a
step. If a person thinks a society promoting solidarity, diversity, equity,
and self-management is potentially attainable, then for him or her to
say it should be morally off the agenda and therefore that people
should not try to define it, explain it, and forcefully advocate for it,
would be to say that humanity should stop progressing and resign
itself to an economic system that falls short of desired virtues. In the
US case, this would make sense only if the person actually thought it
was ideal to have an economy in which one percent of the population

owns the great majority of the means of production and accrues
gargantuan profits as a result; in which roughly 4 percent own most of
the rest of the productive assets, thereby also becoming immensely
rich and powerful; and in which another 15 percent or so own some
residue of productive assets and also monopolize the economic
positions in society that largely decide daily economic outcomes and
circumstances, thereby enjoying associated status, power, work
conditions and, of course, grossly disproportionate income. It would
mean that the person was satisfied with roughly 80 percent obeying
orders for their whole economic lives, subordinate in their workplaces
and even in much of their consumption activities, and in which many in
this huge majority are downright hungry, even if alternatives were
possible.

It is hard to imagine a person in full possession of his mental faculties
and with a level of morality higher than a dung beetle's, who would
argue that in society less solidarity is preferable to more, less equity is
preferable to more, less justice and democracy are preferable to more,
and less control over our lives is preferable to more. But this is what it
would mean to argue that implementing participatory economics or
some other system able to attain these values while also
accomplishing required economic functions should be off the agenda,
supposing one thought it was potentially attainable. So those who wish
to take economic vision off the human agenda and who also wish to
retain a shred of dignity and rationality do not generally make the
argument that we shouldn't want to meet needs and develop
potentials better than we do now. They instead make the argument
that something about parecon, or even about any conceivable
alternative economic system at all, is necessarily so adverse or so
unattainable that even thinking about implementing such a system is a
waste of time.

Why do so many people argue that the desire to attain a better
economy should go into history's garbage bin? Why do so many people
assert that no better economy is possible and that trying to attain one
is a deluded pipe-dream detracting from useful pursuits? One answer is
that a person could feel that a better economy would be wonderful,
thus being a morally sound and sensible person, but nonetheless feel
that regrettably there is no combination of institutions that could
possibly bring about better outcomes. Any effort to improve economic
solidarity, equity, justice, self-manage- ment, diversity, etc., would (a)
fall short of our intentions, and/or (b) cause so much loss of output
and/or of other desired outcomes (such as privacy, say) that the gains
it did attain in equity or self- management or whatever else would be
far outweighed by countervailing losses in output, privacy, etc. This is
the real logic of Alec Nove's position and also of TINA—Margaret

Thatcher's famous assertion that "there is no alternative"—which is
better termed TINBA, for "there is no better alternative."

The first reply to TINBA is why would anyone in his or her right mind
utter such a phrase gleefully? Imagine at some point in history
someone yelling TINBA about slavery, or about child labor, or about
overwhelming illiteracy, or about average life spans in the 20s, 30s,
40s, or 50s, or about dictatorship, and so on. Any sane and morally
sound person yelling TINBA about such things would presumably do so
only tearfully, and only if he or she had had his or her hopes dashed by
a very powerful set of arguments and associated evidence. Why else
would one erect a "do not enter" sign in front of domains that of
course everyone with a shred of moral decency would like to enter?
Without compelling evidence for the claim, it would be pathological on
the part of those suffering the ills of slavery, child labor, overwhelming
illiteracy, short life spans, dictatorship, or, in the modern instance,
stupendous inequalities of economic wealth and power, or it would be
grotesquely self-serving on the part of a few who benefit from such
conditions, to declare that nothing better than such ills is possible and
to be gleeful about it.

The second reply to those proclaiming TINBA is that there is, in fact,
not only nothing compelling that supports their stance, but no
argument whatsoever on behalf of TINBA other than the loud
pronouncements of sectors of the populace who greedily benefit from
such beliefs. There is no operational evidence or analytic argument
that economic institutions which empower workers and consumers to
influence decisions proportionately to how they are affected, or that
reward people in accord only with their effort and sacrifice, or that
disperse responsibilities in a manner which balances empower- ment
and quality of life, are either impossible or fraught with problems so
damning that they outweigh their virtues—or even with problems at
all. In fact, the situation is quite the contrary. Those who have made
preliminary studies of such institutions have found them to be very
promising, while the advocates of TINBA have (predictably) virtually
ignored these analyses.

At a minimum, therefore, until and unless someone makes an
overwhelming and unassailable case that equity, solidarity, self¬
management, diversity, and other desirable values unmet by current
economic institutions are either (a) incapable of being delivered by
different economic institutions, or (b) impossible to deliver without
bringing with them horrible ills offsetting the benefits—attaining a
better economy, and, more specifically, an alternative to markets and
central planning, should be very much on the agenda. Still, the only
definitive final refutation of Nove's academic denial of a third way or of

Thatcher's emotive assertion that "there is no alternative," even when
such claims are made without serious rationale, is to present an actual
third way itself.

Therefore, in this chapter we describe an allocation alternative we call
"decentralized participatory planning." We take you through it
sequentially, from describing its methods of communicating
information, to its institutional structure, to the planning steps, and
finally to a typical example of planning. Our claim, to be further
explored in coming chapters, is that decentralized participatory
planning permits consumers' and workers' councils to participate
directly in formulating a plan that would benefit everyone in a just and
equitable fashion. It arrives at more accurate pricing and economic
adjustment than markets and central planning can achieve, but
additionally it enhances rather than obliterates solidarity, diversity,
equity, and self-management.

Allocation, remember, is the process whereby an economy determines
the amounts to be produced and the relative exchange rates of all
inputs and outputs. It chooses from a nearly infinite list of every
conceivable thing that might be produced in a year with every
conceivable combination of patterns of labor and resource use, plus
every conceivable apportionment of the product, the single final list of
what all the various economic actors actually produce and consume. It
is a gargantuan selection process. There is a massive, nearly endless
set of possibilities of what the economy might do in the coming year.
We settle, over the course of the year, on what the economy actually
does. This process is called allocation. It is what markets accomplish by
selecting via competition among buyers and sellers final outcomes
embodying particular market properties. It is what central planning
accomplishes by selecting via top down commands final outcomes with
particular central planning properties. And it is what any "third way"
will have to accomplish by selecting in its own manner final outcomes
with its own particular (in our case, participatory economic)
properties.

Participatory Information & Communication

What precisely do workers in a council need to know to regulate their
production according to the effects on themselves, and on other
workers, and consumers? And what must consumers know to formulate
their consumption requests in light of their own needs as well as the
needs of other consumers and workers? For informed collective self¬
management, the following conditions must be present:

Participatory workers must weigh the gains from working less
or using less productive though more fulfilling techniques,
against the consequent loss of consumer well being. Likewise,
participatory consumers must weigh the benefits of consumption
requests against the sacrifices required to produce them.

Participatory workers must distinguish an equitable work-load
from one that is too light or too heavy. Likewise, participatory
consumers must distinguish reasonable consumption requests
from ones that are excessive or overly modest.

Everyone must know the true social costs and benefits of what
they desire to consume or produce, including the quantifiable
and non-quantifiable consequences of their choices.

First Communicative Tool: Prices

Allocation performs one very complicated function—providing a means
to decide among options. Should certain productive assets be used to
produce peanuts or prison cells, autos or shoes, in any conceivable
combination of options? Likewise, given such products, what is their
relative worth? How much of one should we exchange for another?

A key concept in making such choices sensibly is the "social
opportunity cost" of doing any particular thing. If we produce peanuts,
how much of other things will we have to give up because we have
used labor, land, facilities, etc. in peanut production? Likewise, if we
produce autos, what do we forego from not having produced
something else that we could have? In markets, prices are an indicator
of bargaining power. We feel they should more properly be an indicator
of true social opportunity costs. They should tell us if we do x, how
much of y could we have done instead, and therefore, do we really
want to do x or would we prefer doing that much y? If an economy is
functioning optimally, then it will be cognizant of the full social effects
of both the production and consumption of its inputs and outputs. The
full range of actual choices in the economy, the pattern of production
and consumption that results from allocation, will simultaneously
determine the social opportunity costs of every single choice among
the totality of possibilities. It is a kind of circular or interactive
relationship. The total quantities produced of shoes, autos, peanuts,
and everything else and how they are apportioned will in sum
determine the value of each particular item, which is its social
opportunity cost. The economy will ideally produce peanuts up until
the point when producing any more peanuts would entail losing some
other item more valuable to society than the extra peanuts, which is to

say, it will produce them up until the point when the social opportunity
cost equals the benefit from the last peanut.

We are churning out pencils, as another example. When do we stop
churning? Pencils are useful, but the more pencils we have, the less is
the value of each new one added to the pile, at least after a point.
Moreover, we certainly do not want to use up so much of our labor and
resources churning out pencils that we start having to forego things
more desirable to us than our growing pile of pencils—say, milk. Ideally
the economy will churn out each output to a point where the benefit of
the last item produced was equal to the opportunity cost of producing
it. To produce another of the item would occur at the same or at a bit
higher opportunity cost and would have the same or a bit less social
value ... so that, by not producing that item we can use our productive
capability to produce something else that benefits us more.

It is complicated, to be sure, but not incomprehensible. The hardest
part is the interactivity—the fact that the decisions have to be made
globally for a whole economy with each decision affecting the basis
upon which all others should be made. Economists call it a general
equilibrium problem.

Let's return to discussing what is needed for a good allocation system.
Producers and consumers use prices as a shorthand way of discerning
the relative value and cost of various choices. Prices should therefore
embody accurate estimates of the full social costs and benefits of
inputs and outputs—they should equal their true social opportunity
cost. In a parecon, prices, or relative valuations, arise in the process of
participatory planning and serve as guides to proposals and
evaluations. The social character of prices—their emergence from the
preferences, circumstances, wills, power, and social interactions of
economic actors not only in parecon, but in all economic systems—is
important to understand.

Too often theoretical economists ignore the interactive and social
origin of prices and view them as quantitative measures that can be
found technically by an analyst solving equations. In the literature on
central planning, for example, prices will invariably be seen as
emerging from a cut and dried mathematical calculation. In
neoclassical literature on markets, similarly, all the prices in the
economy are said to arise mathematically from plugging fixed
preferences and given technologies into some complex equations.

Used carefully this sort of thinking can shed light on some questions, to
be sure. But used indiscriminately to comment on real economies, it
can be very misleading.

The point is, real people's preferences arise in social interactions. Not
only do the outcomes of the clash and jangle of different people's
preferences depend on what those interactions are like, but the very
preferences that people bring to their decisions and that lie at the
basis of the results the economy attains depend on people's
interactions as well. Our preferences are influenced by our
circumstances and situations, which are in turn influenced by the
nature of the economic activities we undertake.

In thinking about allocation, therefore, we should remember that for
estimates of social costs and benefits to be accurate they must arise
from realistic social, communicative processes. If we are to propose
positive approaches for allocation, we have to come up with processes
that give people no incentives to dissimulate regarding their true
desires, that give people equal opportunity to manifest their feelings in
determining outcomes, and that help people arrive at desires that are
not perverted by their situations. It is precisely because our
participatory planning process differs in many respects from the flawed
communicative processes of market and centrally planned allocation
that its prices are different as well.

In any case, prices are "indicative" during the participatory planning
process in the sense that they represent the best current estimates of
final relative valuations. As the process unfolds these estimates
become steadily more accurate. Indicative prices in a parecon are also
flexible in the sense that qualitative information about the actual
conditions of labor and implications of consuming items provides
important additional guidance. We do not use quantitative prices
alone, and the mechanism of arriving at and refining quantitative
prices has checks and balances. Indicative prices (measuring social
opportunity costs) in a parecon derive from cooperative social
consultation and compromise checked by dissemination of qualitative
information and deliberative decision-making. These both ensure that
quantitative indicators remain as accurate as possible and help
develop workers' sensitivity to fellow workers' situations and
everyone's understanding of the intricate tapestry of human relations
that determines what we can and cannot consume or produce. But
since to both assure accuracy and to foster solidarity we need not only
set quantitative prices but also continually socially reset them in light
of changing qualitative information about work lives and consumption
activity, the burden of distributing information in a participatory
allocation procedure is considerably greater than in a non-participatory
economy which simply disregards such matters. Not only must a
participatory economy generate and revise accurate quantitative
measures of social costs and benefits in light of changing conditions, it

must also communicate substantial qualitative information about the
conditions of other people.

Second Communicative Tool: Measures of Work

As we explained earlier, job complexes would be balanced in and
across workplaces. If there were plants with better than average work
conditions, people employed there would spend some time doing more
menial tasks elsewhere, while for plants with below average work
conditions, workers would put some time into more interesting pursuits
elsewhere. For an individual in a given period to work significantly
more or less than the social average and not disrupt the humane
balance of work, she or he need only diminish or increase her or his
hours worked at all tasks in the same proportion. Then, each individual
could receive from her or his workplace an indicator of average labor
hours expended as an accurate indicator of work contributed. Over a
sufficient period, whenever a person's indicator was high (or low)
compared to the social average, the individual would have sacrificed
more (or less) for the social good, and would be entitled to
proportionately more (or less) remuneration in return. In parecon, job
complexes would be balanced by a real social evaluation, but
measures of hours plus intensity worked would serve only as
guidelines for decisions since councils could grant exceptions for
higher (or lower) consumption requests as conditions and needs
warranted.

In short, because in participatory planning people have balanced job
complexes, we will obtain a reasonable first estimate of effort
expended by counting labor hours. These estimates can in turn be
revised in light of effort ratings. In pursuing various routes to personal
consumption flexibility, only significantly unbalancing job complexes
will be prohibited. The measure of work is therefore another
information component of participatory planning.

Third Communicative Tool: Qualitative Activity

To guard against people making decisions based only on an
enumeration of quantitative costs or benefits which could begin to
diverge from accuracy and in any event lacks texture, each actor in a
parecon will also be able to access a list of all direct and indirect
factors that go into producing goods, along with a description of what
will be gained from consuming those goods. This means those who

produce and consume particular goods must communicate to the (still
to be discussed) planning process the qualitative human effects that
cannot be fully conveyed by quantitative indicators. This does not
entail everyone writing long essays about their work and living
conditions. It does mean people will need to generate concise accounts
that substitute for the fact that not everyone can personally
experience every circumstance. Of course, not every worker and
consumer will use all this qualitative information in every calculation.
But when there are odd changes in preferences of workers or
consumers that someone does not understand or wants to explore
further to comprehend what is behind a particular indicative price, the
qualitative information is available for a check and clarification.
Moreover, by paying attention to this information, overtime people will
become familiar with the material, human, and social components of
the products they use just as people are now familiar with the products
themselves. In this way, everyone can more accurately assess the full
effects of others' requests and even their broad collective motives in a
way that enhances solidarity. Both producers and consumers must
therefore be able to consult not only quantitative summaries of overall
social costs and benefits in indicative prices, but detailed qualitative
accounts as well. Only this will ensure that the human/social dimension
of economic decision-making is not lost and guarantee that summary
(quantitative) price data remains as accurate as possible.

Allocation Organization

In parecon, every workplace and neighborhood consumers' council will
participate in the social procedure we call participatory planning. But
besides workplace councils, we will also have industry councils and
regional federations of workers' councils. And besides neighborhood
consumers' councils, we will also have ward, city, county, and state
federations of consumers' councils as well as a national consumers'
council. Moreover, in addition to all these councils and federations of
councils, parecon will have various "facilitation boards" or agencies
that facilitate information exchange and processing for collective
consumption proposals and for large-scale investment projects,
workers requests for changing places of employment, and individuals
and families seeking to find membership in living units and
neighborhoods, among other functions. Finally, at every level of the
economy there will also be facilitation boards to help units revise
proposals and search out the least disruptive ways of modifying plans
in response to unforeseen circumstances.

Steps of Participatory Planning

In participatory planning every actor (individual or council) at every
level will propose its own activities, and, after receiving information
regarding other actors' proposals, and the response of other actors to
its proposal, each actor makes a new proposal.

Thus, each consumption "actor," from individuals up to large consumer
federations, proposes a consumption plan. Individuals make proposals
for private goods such as clothing, food, toys, etc. Neighborhood
councils make proposals that include approved requests for private
goods as well as the neighborhood's collective consumption requests
that might include a new pool or local park. Higher-level councils and
federations of councils make proposals that include approved requests
from member councils as well as the federation's larger collective
consumption request.

And similarly, each production "actor" proposes a production plan.
Workplaces enumerate the inputs they want and the outputs they will
make available. Regional and industry-wide federations aggregate
proposals and keep track of excess supply and demand.

As every individual or collective worker or consumer participant
negotiates through successive rounds of back and forth exchange of
their proposals with all other participants, they alter their proposals to
accord with the messages they receive, and the process converges.
There is no center or top. There is no competition. Each actor fulfills
responsibilities that bring them into greater rather than reduced
solidarity with other producers and consumers. Everyone is
remunerated appropriately for effort and sacrifice. And everyone has a
proportionate influence on their personal choices as well as those of
larger collectives and the whole society.

Preparing First Proposals

Suppose we keep records of the production and consumption that took
place in the just completed year. Then with each year we will have
information about last year's plan. Suppose the prices used to
calculate social costs, benefits, and income last year are also recorded.
Then each year we will have a set of final prices from last year to use
to begin this year's estimates. By storing last year's full plan in a
central computer, access to relevant information, including indicative

prices, could be made available to all actors in the planning process.
Additionally, by accessing such information, each unit can easily see
what its own proposals were in each round of the prior year's planning
process. With all this available, how do workers' and consumers'
councils plan for the coming year?

1 They first access relevant data from last year.

2 They more or less simultaneously receive information from
facilitation boards estimating this year's probable changes in prices
and income in light of existing knowledge of past investment decisions
and changes in the labor force.

3 They also receive information from production and consumption
councils regarding long-term investment projects or collective
consumption proposals already agreed to in previous plans that imply
continuing commitments for this year.

4 They review changes in their own proposals made during last
year's planning to see how much they had to scale down their
consumption desires or their plans to improve their quality of work life,
and to remember their past aspirations in these regards. They also
look to see what increases in average income and improvements in the
quality of average work complexes are projected this year, and how
these might best be taken advantage of.

5 Finally, using last year's final prices as starting indicators of social
costs and benefits, they develop a proposal for the coming year, not
only enumerating what they want to consume or produce and
therefore implicitly what they think society's total output should be,
but also providing qualitative information about their reasons. This
proposal enters the mix with all others, feedback arrives, and revisions
are made, round by round, until a final version is reached.

Please note, this does not mean that individual or collective councils
must specify how many units of every single product they need down
to size, style, and color. Goods and services are grouped into
categories accordingly to the interchangeability of the resources,
intermediate goods, and labor required to make them, as well as the
easily predicted variation of minor optional features. For planning
purposes we need only request types of goods, even though later
everyone will pick an exact size, style, and color to actually consume.

At any rate, individuals present consumption requests to neighborhood
councils, which collectively approve or disapprove the requests and
organize them into a total council request for individual goods for all

their members along with the neighborhood collective consumption
request, to become the total neighborhood consumption proposal.

Neighborhood proposals are added to consumption requests from
other neighborhoods and then to full ward proposals, city proposals,
and so on. Having the next higher-level council approve or contest
lower level requests until they are ready to be passed on saves
considerable planning time and is essential for collective implications,
in any case, as we will see later.

In the same way, on the production side of the economy, a firm's
iteration board provides all its workers with summaries of last year's
production, including what was initially proposed, changes made
during planning iterations, and what was finally approved. The board
also issues its prediction of this year's requests based on
extrapolations from new demographic data and last year's
negotiations. Individual workers consider this information, discuss
ideas for improving work life, and enter personal proposals in turn
averaged into the firm's first proposal for inputs and outputs. After
some number of iterations, firm proposals are discussed, negotiated,
and decided as a unit rather than with each individual making his or
her own proposal and these being averaged.

It should be kept in mind, as well, that preparing and communicating
relevant planning information as part of planning facilitation either
inside a firm or industry, or at various consumption levels, is a work
task like any other, though with its own special features. In other
words, facilitation work is included as part of a balanced job complex,
of course. And note also that in addition to quantitative proposals for
each production and consumption unit, a qualitative addendum
including descriptions of changes in circumstances and conditions is
also entered into the planning system. At any time, a council can
access the data banks of any facilitation board and any other council.
The whole process is open to all.

Proceeding from One Proposal to Another

The first proposals are in. We have all answered how much we want to
work and consume in light of our own presumably overly optimistic
assessments of possibilities. Do the proposals constitute a plan or must
we have another round? To decide, it is only necessary to collect all
proposals and compare total demand and total supply for every class
of final good and service, for every intermediate good, and for every
primary input. In a first iteration, where consumers propose in part a

"wish list" and workers propose substantial improvements in their work
lives, while some goods may be in excess supply, for most goods initial
proposals will likely generate excess demand. In other words, initial
proposals taken together will not equal a feasible plan. As the next
step, every council receives new information indicating which goods
are in excess supply or demand and by how much, and how the
council's proposal compares to those of other comparable units.
Facilitation boards provide new estimates of indicative prices projected
to equilibrate supply and demand.

At this point, consumers reassess their requests in light of the new
prices and most often "shift" their requests for goods in excess
demand toward goods whose indicative prices have fallen because
they were in excess supply or at least less in excess demand than
others. Consumers' councils and individuals whose overall requests
were higher than average would feel obliged to whittle down their
requests in hopes of winning approval for their proposals. Equity and
efficiency emerge simultaneously from this negotiation stage. That is,
the need to win approval from other similar councils forces councils
whose per capita consumption request is significantly above the social
average to reduce their overall requests. But the need to reduce can
be met by substituting goods whose indicative prices have fallen for
those whose prices have risen. Attention focuses on the degree to
which councils diverge from current and projected averages, and on
whether their reasons for doing so are compelling.

Similarly, workers' councils whose ratios of social benefits of their
outputs to social costs of their inputs were lower than average would
come under pressure to increase either efficiency or effort, or to
explain why the quantitative indicators are misleading in their
particular case. Before increasing their work commitment, workers
would try to substitute inputs whose indicative prices had fallen for
inputs whose indicative prices had risen, and substitute outputs whose
indicative prices had risen for outputs whose indicative prices had
fallen.

Each round of planning, or iteration, yields a new set of proposed
activities. Taken together, these proposals yield new data regarding
the status of each good, the average consumption per person, and the
average production "benefit cost ratio" per firm. All this allows for
calculation of new price projections and new predictions for average
income and work, which in turn lead to modifications in proposals, all
of which recurs until excess demands are eliminated and a feasible
plan is reached.

Flexible Updating

Converging and updating are related because both can take advantage
of the large scale of the planning process. For example, assume we
have settled on a plan for the year. Why might we need to update it
during the year, and how might this be done with the least disruption?

Consumers would begin the year with a working plan including how
much of different kinds of food, clothing, meals at restaurants, trips,
books, records, tickets to performances, and so on they will consume.
What if someone wants to substitute one item for a slightly different
one? Or what if she wants to delete or add entries to what she had
expected to prefer for the year? Or what if she changes her mind and
wants to save or borrow more than she planned to?

Well, she belongs to a neighborhood consumers' council that in turn
belongs to a ward council, a city federation, and so on. Some changes
that Tony and Thalia and all the rest opt for will cancel out when taken
together with changed requests from all the consumers within the
neighborhood (some people going up for a particular product, other
people going down for it). Other variations will cancel out at the ward
level, and so on. As long as consumer adjustments cancel each other
out at some consumption federation level, production plans need not
change. Indeed, making adjustments without disrupting production
plans will be one function of consumer federation boards.

But what happens if aggregate demand for a particular item rises (or
drops)? Suppose individuals record their consumption on "credit card”
computers that automatically compare the percentage of annual
requests "drawn down" with the fraction of the year that has passed,
taking account of predictable irregularities such as birth dates and
holidays, seasonal variation and the like. This data can be processed
by planning terminals that communicate projected changes to relevant
industry councils that, in turn, communicate changes to particular
firms. The technology would be similar to that used in contemporary
computerized store inventories, where cash register sales are
automatically subtracted from inventory stocks. In any case, what
would then happen is that consumer federations, industry councils,
and individual work units would negotiate adjustments in consumption
and production, which could in turn entail adjustments in work
assignments to account for changed demand. Such dialogues may lead
to work diminishing in some industries and increasing in others,
including possible transfers of employees, but there need be no more
moving about than in other types of economies. In any case, the need
for workers to change jobs or increase or diminish workloads and the
ensuing impact of that on their lives would be a factor proportionately

considered in the negotiations over whether and how to meet changed
demands.

Notice also, since each firm's activities have implications for other
firms, if planned matches between supply and demand are calculated
too closely, any change in demand could disrupt the whole economy.
For this reason a "taut" plan would prove unnecessarily inconvenient
since it would require excessive debating and moving. To avoid this
and to simplify updating, the plan agreed to should be loose enough to
include some unutilized capacity for most goods. A practical knowledge
of those industries most likely to be affected by non-canceling
alterations would facilitate this type of preparatory slack planning and
is logically no different than planning in advance for medical, disaster
or other needs that individuals alone can't predict, but that we can
socially gauge.

There is a related technical issue, however. During the planning period
there emerges a certain array of exchange rates or prices based on
planned inputs and outputs for the economy. At the end of the year,
we will have had actual inputs and outputs for the whole economy.

Due to changes in output of various goods from the initial plan to the
final reality, final real prices will be somewhat different from planned
ones. A person could have benefited or lost, having paid the plan price
but gotten items whose true value was somewhat higher or lower. A
parecon could simply reassess people's overall expenditure, charging
them accurately at year's end, leading to some debt or remittance
compared to their initial intentions. Additionally, facilitation boards
could release price estimates every few months, for those who wished
to avoid any large variations by adapting choices based on new
valuations. Or, a parecon could instead allow such errors to pass on the
assumption that over many years they would average out to no one's
undue advantage. These are low order details that will no doubt be
resolved in practice, perhaps in different ways in different economies,
not purely in theory. The thing to keep our eye on, instead, is the
broad institutional structure of our preferred vision.

Converging On a Plan

Realistically adjusting indicative prices in light of stated preferences to
balance supply and demand is more complicated in practice than in
economists' theoretical models. A product in excess demand in one
planning iteration could overshoot equilibrium into excess supply as
workers offer to produce more and consumers offer to request less
responding to indicative prices. Since each product's status affects

many others, progress in one industry could disrupt equilibrium in
another. Regarding market-driven economies subject to similar
dynamics, theoreticians' solutions to these headaches simply assume
away the troublesome phenomena. Whether the issue is market
equilibrium or the convergence of iterative planning procedures,
abstract mathematical remedies with names like "convexity” and
"gross substitutability” are good aspirin for theoretical headaches, but
assumptions that grossly distort reality are no aspirin at all for
sincerely putting theory into practice.

To make the participatory planning procedure efficient, there- fore,
specific economies will incorporate flexible rules that facilitate
convergence within a reasonable time but do not unduly bias outcomes
or subvert equity. Procedures can range from simple formulas carried
out by computer that take short cuts toward equilibrium, to rules
designed to prevent time consuming cycles of dissent and discussion,
to adjustments fashioned and implemented by workers who are
experienced in facilitating convergence when particular situations
arise. Devising and choosing from among these and other possibilities
is a practical issue in implementing any actual participatory economy.
Some considerations in a choice of methods include, for example:

1 The extent to which iteration workers could accidentally or
intentionally bias outcomes.

2 The extent of reductions in the number of iterations required to
reach a plan and ensuing time savings.

3 The amount of planning time saved through compartmentalizing
subsets of iterations with special simplifying procedures.

4 How much less onerous to producers and consumers their
calculations could be made.

One thing to make clear about participatory planning and parecon in
general is that there is no single right answer to how to do most
functions. As with capitalism, within a parecon various approaches to
problems will be taken in different parts of the economy and different
institutions. Different approaches could exist for measuring labor
effort, for example, or for balancing job complexes in or across units,
or for organizing councils, or regarding the trade-off between different
kinds of decision-making affecting participation and apportionment of
influence, or regarding tradeoffs between individual and social
consumption and among different instances of the latter, and
regarding methods for facilitating convergence.

The point is that a parecon is a parecon insofar as it employs
pareconish remuneration, job definition, ownership, council
organization, allocation, and decision-making, with the values of
solidarity, equity, diversity, and self-management guiding people as
they make diverse choices among different means of implementing
pareconish aims.

A Typical Planning Process

Since the procedure we have described is dramatically different from
traditional market and central planning allocation, it is useful to
describe what a typical planning process might actually look and feel
like to its participants.

The first step is for each individual to think about her or his plan for the
year. Individuals know they will end up working in a balanced job
complex, and can expect to consume an average consumption bundle
unless their work effort is above or below normal intensity or they have
special needs that dictate greater reward. The first decision each
individual will make is whether they want to "save" by working longer
or consuming less than average, or to "borrow" by working less or
consuming more than average. Facilitation boards will provide an initial
estimate of the year's likely average consumption and workloads
based on the previous year's levels, on investments in equipment and
training, and on adjustments made during the planning period. When
you prepare your first proposal you understand that you are not only
proposing a level of work contribution and consumption request for
yourself, but by extrapolation you are also proposing, on average, a
level for everyone else as well. To be realistic you must coordinate
your work and your consumption with one another, though you need
not agree with facilitation board growth estimates.

In other words, what you propose is: "I would like to work so much at
my job complex and to consume so much (for that work) broken down
in the following way." And this proposal would be based on last year's
experience, your prediction of economic growth, and your individual
saving and borrowing. Everyone able to work makes such a choice,
trying to optimize their well-being given their particular preferences
and within the constraint that the overall amount consumed must also
be produced and that responsibilities and rewards in this endeavor will
be distributed equitably.

After first proposals are collected, new indicative prices are calculated
and new projections of social averages estimated. Note that it would

not even be possible to precisely implement most initial production
proposals since in most firms one person in a team may have proposed
working more hours than another person in the same team, where
their tasks are interdependent so that workers can only do their work
together. Moreover, most goods will be in excess demand so the initial
plan is of course infeasible on those grounds as well.

So in the next step, every individual would formulate their response.
You compare your proposed workload and proposed consumption level
to the average proposals of others. You might also consider more
localized averages, for example for your firm or industry, and for your
council or neighborhood. You consider the status of each item you
ordered or proposed, not least because excess demands and supplies
will be reflected in changes in indicative prices. That is, you will be
faced with summaries of the statuses of goods as well as new
estimates of social opportunity costs and benefits. After you consult
descriptive explanations for anything that might seem odd to you, like
large gaps in worker productivity or consumer choice, and after you
consult with whomever you like and examine whatever data interests
you, you make any desired changes and enter your second proposal.

And, once again, all these new proposals are summed and the new
information is made available for the third iteration. So far there have
been no rules or limits on workers' or consumers' responses. Now,
however, there could be a change. (The phrase "there could be"
means a particular implementation of participatory planning might opt,
perhaps after experimentation and in light of experience, for what we
now describe. Another implementation may use different techniques,
however.) Instead of being able to change proposals in any direction
by any amount, limits might be imposed. For example, consumers
might be prohibited from increasing their demand for certain goods
beyond some maximum percentage above projected averages for the
economy. Or producers might be prohibited from lowering output
proposals by more than some percentage, in this and subsequent
rounds.

The point is that it is possible to impose rules limiting changes to
specific ranges to keep the status of goods from varying excessively
from round to round. Any particular implementation of participatory
planning will settle on socially desirable and mechanically efficient
rules to guide the behavior of producers and consumers in different
iterations.

In the third or fourth iteration, proposals might be limited to councils
instead of individuals. Consumers would meet in their local
neighborhood councils and workers in their workplace councils to settle

on council-wide proposals. In this stage, work proposals would go from
being abstract averages to consistent plans that could be enacted if
the inputs requested were made available.

Note that nothing about our procedures forces people to consume the
same amounts of different goods. Individual consumers and producers
can hold steady on proposals that are far from average. On the other
hand, workplaces will feel pressure to work up to average benefit-cost
ratios, and consumers will be pressured to keep their overall requests
from exceeding average income. Indeed, at this stage, production
councils that persist, with proposals that have benefit-cost ratios below
their industry's average might have to petition their industry not to
disband them for being dysfunctional. And, similarly, local consumers'
councils with above average proposals might have to petition higher
federations, including an explanation of special circumstances that
justify their requests.

The fifth iteration in our hypothetical procedure might deploy still
another rule to accelerate planning. This time facilitation boards would
extrapolate from the previous iterations to provide five different final
plans that could be reached by the iterative process. What would
distinguish the five plans is that each would entail slightly different
total product, work expended, average consumption, and average
investment. In this version, everyone affected would then vote, as
units, for one of these five feasible plans. Each plan would be a viable
consistent whole. Once one of the five was chosen as the base
operating plan, units could adjust their requests in subsequent
iterations in conformity with the base plan until individual agreements
were also reached.

The Problem of Externalities

The above discussion focuses on individuals making consumption
requests and on workers and workplaces making production proposals.
It explains how proposals for what producers wish to supply and for
what consumers wish to demand are conveyed and contrasted, and
how, in light of related information, each individual alters their
proposals until a plan is reached. Embedded in the logic and structure
of the discussion is how collective consumption is handled as well, but
we need to clarify that a bit more.

Collective Consumption

Suppose your neighborhood would like a new swimming pool, your
town wants to expand its public park, or your state wants to overhaul
its public transport system. A consumer council proposes any or all of
these as part of its plan. There are two aspects to consider. First, if the
collective consumption is to occur, it of course has implications for
what must be produced. This is no different than what holds for a
whole bunch of private consumption requests taken together, and
handling this is like the private consumption case, as described earlier.
Second, these types of collective goods are still, ultimately, consumer
goods that benefit people, and they must be both charged to consumer
budgets and considered with attention to their impact on everyone
they would affect, presumably the people making the order and
benefiting from it.

At first glance, there would seem to be no new issues. The
neighborhood council discusses the matter and decides to ask for a
pool. If the proposal goes through, people in the neighborhood will be
charged on their consumption budgets their fair share of the indicative
price, which price in turn may alter during the plan's iterations. If the
cost to be charged is too high, that is, if the neighborhood residents
feel they will have to give up too much of their consumption allotment
to have the pool, the neighborhood foregoes the request. If the amount
they have to pay from their budgets to get the pool is acceptable to
them, given their desire for the pool, they persist in their request.

So far so good, but some problems arise. Larry and Lance both live in
the neighborhood. Larry is going to swim but Lance is not. Are they
both charged a share, or only Larry? Suppose the pool will be used and
enjoyed by folks in the surrounding towns as well. Larry and Lance's
neighborhood may have proposed the pool, but if it is going to be built
should not all those benefiting bear some of its cost? And what if the
reverse is the case? What if the pool's effect on water delivery will
adversely affect the neighborhood next door? How do people suffering
repercussions from the decision to have a pool influence the decision
to propose the pool to the planning process of a council they are not
even in?

Or consider the same problem on a larger scale: suppose Michigan's
citizens, through their councils and after due deliberations, decide to
collectively request a hydroelectric dam to replace a horribly polluting
series of coal-based electric generators. How do the people of Michigan
decide to request this in the planning process? More, how is the dam's
cost to be allocated against the consumption budgets of the people of
Michigan? Do the asthmatic citizens who suffer hugely from coal¬
generated pollution pay more than the folks less bothered by that
pollution? But more, it turns out that the pollution from the coal plants

afflicted Chicago and to a lesser extent other cities in Illinois. Shouldn't
those citizens who will also benefit bear some of the costs of the new
dam, and, if so, how does that come about? To what degree do they
pay and what impact do they have on the deliberations?

Or suppose the reverse is the case. The Michiganites are pro- posing
some mass project which will not benefit but rather adversely affect
people in Illinois. Again, how do the citizens of Illinois have their
appropriate impact? Even more complicated, suppose the rest of the
country enjoys clean air. Isn't there an equity issue? Why should
Michiganers, even if they are most affected, foot the bill if, in fact, they
were enduring worse than average air conditions in the first place?
Parecon's answers to these queries are rooted in the logic of council-
based organization and participatory planning understood as social
deliberative processes.

• First, unlike in markets, we want decisions about goods to
account for their full social costs and benefits. We want the
indicative price of goods to reflect all their effects as best we are
able to make that happen.

• Second, we want all people affected to proportionately influence
decisions.

• Third, when a proposal is made that affects large numbers of
people, it is not just that we want the initially formulated
proposal decided on properly. We also want the system to permit
and even to facilitate the proposal's improvement.

That is, suppose a proposal has negative external effects. In addition to
properly accounting for them, why not amend the proposal to reduce
them or even completely offset their impact? The participatory
planning process should not only promote that all those affected
decide on collective proposals, but that they be able to amend and
otherwise improve such proposals. When my neighborhood requests a
pool or Michigan requests a dam, very likely the people involved do not
have at their disposal the full awareness and insights of people in other
neighborhoods or states. We do not want to incorporate only the
decision influence of those other people, but, if they are affected, also
their ideas and ingenuity.

To these ends, in participatory planning, when the residents of a
smaller council propose some desired collective consumption (a pool or
a changed energy delivery system), the proposal has to not only gain
support in their own council, but must also be delivered to more
encompassing councils above. So a proposal may go from a
neighborhood up to a town and then to a city, a county, and so on, and
likewise it may go from a state to a region and on to a country.

If a pool is proposed in my neighborhood, or a new dam in my state,
and if there will be beneficiaries beyond the area of the proposing
council, then in passing up the proposal its advocates are looking for it
to become a proposal of the higher level council, with the hope that all
who benefit at that next higher level will also be charged for its
consumption, rather than only a subset in the smaller proposing
council footing the whole cost.

If we have a proposal, in contrast, which has negative impact beyond
our own council's citizens, then after passing it up, broader
constituencies will presumably indicate their displeasure. In this case
too, the proposal is taken over by the higher level council, but this time
it is likely adapted through deliberations to rectify or otherwise account
for its broader negative impacts. The point is that regardless of where
proposals originate, collective goods consumption proposals are
eventually sponsored at the level where they have their overwhelming
proportion of impact, and at that level they are massaged and refined
before acceptance. Only then will the proposal be put to producers and
other consumers, to assess opportunity costs, etc.

What about the apportionment of influence over these decisions, and
payment for the items? In the absolute ideal case, each individual is
going to influence a choice in proportion to the extent it affects him or
her. Likewise, each is going to carry a share of the cost proportionate
to the extent that he or she benefits.

Members of a council make decisions by means that involve both
information transfer about the decision's properties and about people's
reactions to it, as well as deliberations over possible refinements, etc.,
and via some agreed upon set of voting rules. Parecon principles say
we ought to choose all these mechanisms to try to make most likely an
outcome that accounts for all relevant information and effects, is
appropriately influenced by all concerned, and takes time and energy
commensurate to what is at stake, but no more. There is no single
right answer to how to achieve all this. One person might feel that with
each decision we should try as perfectly as possible to represent
divergent opinions. Another person might feel that over the whole
planning process there are many such decisions and if we err a little in
some of them, the deviations from perfection will average out. Why not
do a good job, therefore, but save the extra time required to do a
nearly perfect job in the knowledge that in sum and on average,
deviations in each decision will more or less be made up for by
deviations in others?

There are other possible attitudes as well. But the point is that unlike in
other systems where the outcomes are determined by elites with no

attention to either most of the relevant information or most of the
impact, or to the wills of most people affected, or to the merits of the
methods utilized, in parecon all these considerations are central.

Take the case of the pool in the neighborhood. It is proposed by
someone living there, is supported by others, and so is put forward as
a specific proposal. Members express their reactions. The pro- posal
clearly fits into some broad category of decisions typically decided by a
particular decision-making approach, let's say majority vote by the
whole neighborhood. If the proposal passes, it is is adopted along with
a plan for how the bill will be charged throughout the neighborhood.
The proposal then goes up to the next council level. If folks in higher
councils are adversely affected, they begin to debate anew, and they
may reject the proposal, or, more likely, add various amendments that
would make it acceptable by reducing or eliminating its adverse
implications. Debate between levels could also occur, leading to
refinements as well. If the neighborhood felt that broader
constituencies should help with the payment, it would pass up the pool
request not as a finished proposal, but as an entreaty that the higher
level council adopt it as their proposal, rather than the neighborhood
having to go it alone.

What if the original vote in the neighborhood council failed? The
proposers have a number of options. Those in favor could form a
subgroup and join resources to propose the pool as part of their
personal consumption allocations. As with other personal consumption
requests, if there were harm to others, the neighborhood could
intervene; but otherwise personal consumption requests that are
within average consumption levels are approved. However, because
these are personal consumption requests, the requesters would have
to forego help with payment for the pool from others in the
neighborhood. A second alternative that could be pursued if the
original vote in the neighborhood council failed would be that the
proposers could go to the next higher council to see if they could
convince that body to fund a pool, though the opposition of the
neighborhood council would be a strong count against doing so.

The situation is essentially the same for Michigan enacting a massive
project that would affect people throughout the state, or also in Illinois.
Each collective consumption good proposed in the planning process is
addressed first to determine the appropriate council level to handle it
to be sure all its significant positive and negative effects are dealt with
appropriately. Next, deliberations discover the properties of the
proposal and its implications for various users or bystanders, etc.
Reactions are presented. Deliberations take place. Finally, decisions

are made using voting rules chosen to be as suitable as possible to the
case in question.

In the negotiations themselves, proposals are altered in an effort to
arrive at ones that are universally desired or at least overwhelmingly
accepted. Take the Michigan dam. Suppose it would displace various
people. The initial proposal (we might hypothesize) could have come
from a city well away from the proposed site of the dam that was
seeking better energy provision and cleaner air, and that might have
ignored the harsh implications the dam would have for those
displaced. As the proposal goes up through the ascending council
levels, the local people who would be displaced gain knowledge of it
and join the deliberations. Given the huge impact on them, they would
play a powerful role, being given a chance to make known their horror
at the idea. The proposal is changed to include reimbursing people
from the dam region, providing them new houses in locales of their
choosing, up to and including reconstructing their town, all as part of
the cost of the dam.

The point of all this is that goods with substantial collective impact are
handled by social deliberations that arrive at choices that try to
appropriately incorporate the wills of the people affected, to massage
and modify proposals so they become optimal, and to apportion
payment for them in accordance with the benefits they bestow, and
when need be, to correct for negative implications or make restitution
for them.

Is it all accomplished perfectly? Not always. Are there disputes or
mistakes? Of course. These are fallible social processes. But in contrast
to markets and centrally planning, problematic outcomes arise due to
ignorance or to errors, not due to systematic failings that always
elevate some groups and make others subordinate, that incorporate
only limited information, and that employ authoritarian procedures.
Moreover, the above description of how participatory planning deals
with collective goods and externalities reveals that the planning
process has additional implications for individual consumption beyond
those earlier explicitly described.

Individual Consumption

Consider a cigarette smoker. In the best possible world, the price of
cigarettes (assuming they are not outlawed) should reflect not only the
usual matters of the labor and other ingredients that go into cigarette
production, but also their impact on those smoking them and on the

health system that cares for those who become ill, and their impact on
those in the vicinity of smokers, and on the health system that cares
for them. How does the price of cigarettes get set in a parecon? How
well does it accord with the best possible world? Who pays the costs
and enjoys the benefits?

The adverse impact of smoking on health, society might decide, should
be paid for by the smoker. Health care would be free, but why should
everyone in society foot the bill for health care that arises due to
predictable, avoidable choices? On the other hand, what about sports
injuries or even pregnancy—are these comparable? There are issues,
obviously, about what aspects of a good's implications are the
responsibility of its users, and what aspects are properly a part of
society's responsibilities. There is no need to explore all dimensions of
all variants for all goods here. What is important about parecon is the
institutions that arrive at assessments in such matters.

Thus, if our particular prediction about what people would decide was
appropriate, the price of cigarettes would include a component fee to
cover the costs of health care for medical problems that arise from
smoking cigarettes. The cost would be high. But what about second¬
hand smoke? Cigarettes are, in this respect, a collective good. If a local
council proposes, in sum, to consume a total volume of cigarettes—
5,000 cartons, say—if their consumption was entirely unregulated, the
adverse impact from second-hand smoke would be significant. Councils
at many levels, wanting a healthy environment, would be appalled by
the overall consumption request. What happens? As with the earlier
examples, councils deliberate.

The first possibility is to implement restrictions that would reduce ill
effects, such as no smoking zones. A second options is to charge fees
that cover the costs of ventilation methods, and medical charges. A
third possibility is to alter the product itself to reduce its ill effects. A
fourth possibility is the more aggressive banning of the product
entirely, on grounds that there is simply no way to reduce the ill effects
sufficiently to permit its safe consumption. Perhaps there are other
possibilities. The point is, as with more typically collective
consumption, individual goods which yield adverse collective effects
are deliberated partly on a personal level, as in each consumer saying
that they want or do not want cigarettes, but also by larger councils
that would consider the sum total consumption by all members and its
broader implications.

One last example: consider the purchase of gasoline for an auto¬
mobile. The consumer wants gas in order to travel from place to place.
Let's ignore, for the moment, the obvious option of providing cleaner

burning cars, better public transit, etc., assuming that these options
have not yet been achieved. Consumers are in a position to request
gas for their travel in light of a clear understanding of how much they
desire to travel, as well as the conditions of the workers who produce
and dispense gas, and the opportunity costs of foregoing other uses of
the gas and of the assets used in the gas's creation. Likewise, if
informed by a high indicative price and by qualitative information that
gasoline burning has external pollution effects of great cost,
consumers will moderate their requests accordingly (while also, we
assume, clamoring for better modes of transport). The problem is, how
does the impact of pollution affecting distant and diverse citizens
translate into appropriately modified qualitative information and
indicative prices that are conveyed to the gasoline consumer? How is
it, for gas or for other similar products, that what are currently called
external implications of transactions become, in a parecon,
appropriately weighted factors integral to pricing and therefore also to
consumers' and producers' choices?

If no one seeks clean air, there is no issue to be addressed. No
economy can account for unexpressed preferences, of course. But if
local, regional, or wider constituencies, through their councils, desire
clean air, then the situation becomes analogous to the case of the
cigarettes. Suppose the sum of the gas requests the Los Angeles
council receives comes to a billion gallons of gas consumption for the
coming year, or whatever number it turns out to be. The cumulative
effect, if the requests are adopted, will facilitate transportation but will
worsen air quality with resulting sickness and other problems. Citizens
concerned about their health will, acting through their local, city, and
regional councils, insist that the greater Los Angeles council include
the costs of pollution in their assessment— abatement measures,
medical costs, work time lost to illness, etc.— and urge stricter
emission standards and other changes in the consumption choices.
Again, there would be a collective deliberation because there is a
collective impact, and the result is that while each gasoline consumer
makes a personal choice, the implications for the broader community
have an impact on that choice by pushing up the indicative cost, on
the one hand, and conveying information that helps propel alterations
in options, on the other hand.

Conclusion

The point of these special cases addressing collective consumption is
threefold.

1 We wanted to specify the pricing and deliberative properties of
participatory planning vis-a-vis public goods and what are currently
called externalities, whether positive or negative.

2 We wanted to convey, again, our two-track approach to its subject
matter. On the one hand, we talk about basic institutions, like balanced
job complexes, remuneration for effort/sacrifice, participatory planning,
and council demo- cracy, and in doing so we lay out demanding norms
and features. On the other hand, to make the meaning of these
defining features clear, we also describe a more detailed context of
features that are more hypothetical and could vary within particular
economies and also from one economy to another, with many of the
likely possibilities to be discovered and refined in the future.

3 We wanted to emphasize, again, that in a society, outcomes arise
from social processes. Written descriptions tend to get cut and dried,
logical, precise, math-like. But the actualities these summary accounts
describe in fact involve infinite details. There is no such thing as
perfect remuneration for effort/sacrifice, perfectly balanced job
complexes, perfectly accurate attribution of perfectly proportionate
say in decisions, nor is there one best method for all the steps
associated with trying to accomplish these aims in every possible
context What we have done is to construct a vision whose logic
advances these aims, and whose social processes will diverge from the
aims only due to ignorance or the choice to save time by settling
negotiations satisfactorily rather than perfectly, but not due to some
systematic incapacity or bias that always and inexorably obstructs
these aims. If we compare the "ideal" participatory economic model to
the "ideal" capitalist, market socialist, or centrally planned socialist
model, the participatory economy maximally attains our aims where
the other economies systematically violate them. If we examine not
the rarified world of perfect models, but the real world of actual social
processes, the case becomes stronger because the fall-off in
achievement in parecon as we move from theory to the real world is
quite modest, but the fall-off in performance of the other models is
huge and destructive.

We have now presented a description of a third way to accomplish
economic allocation beyond markets and central planning. Most
readers will probably find evident by now that implementing a parecon
is possible. When we address possible criticisms of participatory
economics, concerns about whether implementing it will have adverse
implications for matters of efficiency, incentives, and other reasonable
concerns, will be addressed further. But we should also tell
professional economists reading this volume that in The Political
Economy of Participatory Economics (Princeton University Press, 1991)

and also online at www.parecon.org we provide a mathematical model
demonstrating parecon's superior convergence, efficiency, and
stability properties as compared to those demonstrated by similar
models for market and centrally planned economies, all with the
understanding that desirable allocation should produce each item until
its true social opportunity cost equals its true marginal benefit to
society. Parecon, in other words, attains familiar productivity and
allocative aims better than old systems, and goes on to as well
advance equity, solidarity, diversity and self-management, unlike old
systems which trample those values.

Chapter 9

Summary and Defense

I have the audacity to believe that peoples everywhere can have three meals a day
for their bodies, education and culture for their minds, and dignity, equality, and
freedom for their spirits. I believe that what self-centered men have torn down, other-
centered men can build up ... human progress is neither automatic nor inevitable ....

We are now faced with the fact that tomorrow is today. We are confronted with the
fierce urgency of NOW. In this unfolding conundrum of life and history there is such a
thing as being too late .... this is no time for apathy or complacency. This is a time for

vigorous and positive action.

— Martin Luther King

Where are we at so far? What characterizes a participatory economy?
Also, since we will not get to serious treatment of plausible worries
about a parecon until part four, and since some readers may not be
ready to jump into an assessment of its benefits before at least having
certain key problems rebutted, why isn't parecon flawed in the variety
of ways most folks initially worry about?

Workers' Councils and Balanced Job Complexes

As we have described thus far, in a parecon, democratic workers'
councils would carry out production. Everyone could freely apply for a
job and membership in the council of their choice, or form a new
workers' council with whomever they wish. Decisions within councils
would be self-managed. Appropriate information dispersal, means of
expressing preferences, and decision-making processes would ensure

as best as possible that each individual influences outcomes
proportionately to the effect of the outcomes on him or her. To
facilitate this, parecon would balance individual work assignments for
desirability and for empowerment within and across workplace units.

To revisit this key point in more detail: every economy organizes work
tasks into what are usually called "jobs" that constitute all the tasks a
single individual will perform. In hierarchical economies most jobs
contain a number of similar, relatively undesirable and unempowering
tasks while a few jobs consist of relatively desirable and empowering
tasks. Why should some people's work lives be less desirable than
others? Doesn't taking equity seriously require balancing jobs, or work
complexes, for desirability? Similarly, if we want everyone to have
equal opportunity to participate in decision-making so that the formal
right to participate translates into an effective right to participate,
doesn't this require balancing work complexes for empowerment? If
some people sweep floors all week while others review new
technological options and attend planning meetings, is it realistic to
think the former will all have equal opportunity to participate as the
latter simply because they each have one vote in the workers' council
and a chair at the decision table?

Balanced job complexes do not entail an end to specialization. Nor do
they deny the need for expertise. Instead, as we have described
earlier, each individual in a parecon—including specialists and
experts—will do a modest number of tasks some of which will be more
enjoyable and some less, and some of which will be more empowering
and some less, such that over a reasonable period the overall average
empowerment impact for each job will be the same as that for all other
jobs.

The usual arguments against balanced job complexes are:

1 Talent is scarce and training is socially costly, therefore it is
inefficient for talented people or people with training to do menial
tasks.

2 Requiring everyone to participate equally in economic decisions
ignores the fact that some can do a much better job than others.

In brief, previewing a more comprehensive treatment to appear later in
this book, how does a pareconist reply to these objections? The
"scarce talent" argument against balancing work complexes is
generally overstated. If one assumes most of the work force has no
socially useful, trainable talents, then the conclusion follows. If one
assumes we could not have more people doing skilled tasks, it follows.

But these assumptions are false. It is true that not everyone has the
talent to become a brain surgeon and also that there are social costs to
training brain surgeons. But it is not true that everyone who can do it is
doing it. And as well, most people have some socially useful talent
whose development entails some social costs. An ideally efficient
economy would identify and develop everyone's most socially useful
talents. If this is done, then there is a significant opportunity cost no
matter who changes bedpans and the conclusion that it is grossly
inefficient for brain surgeons to change them no longer follows. When
Joe, who is currently a surgeon, has to also change bedpans, we may
lose some of the possible output we could enjoy from Joe's training and
talents—assuming he could instead do complex surgery all day long.
But we do not forego the surgery entirely, of course. We just have
more people who do surgery less time each. And when Sue—who now
only changes bedpans goes through a process of socialization and
schooling and on-the-job experience that elicits her best capabilities,
we gain those best capabilities from their having been suppressed in
the older model.

What is the trade? Well, before tallying, we have to also consider
moving from a situation of injustice and its resulting oversight and
resentment to a situation of solidarity, and take into account the
impact of that change on morale and output, and also on social
relations more broadly. The argument against balanced job complexes
on grounds that on average in switching from our current society to
the proposed one we will lose huge quantities of needed output is
racist, sexist, and classist because it asserts that those displaying few
talents in contemporary hierarchical corporate work arrangements
actually have few talents, rather than having diverse talents that were
buried by debilitating social structures and mind-numbing work. It is
also myopic, or perhaps more accurately, profit-centered or
productivist, in discounting the benefits of self- management,
solidarity, diversity, and equity, which would all be enhanced by
incorporating balanced job complexes even if society does get less
output as a result from some particular Mozart or Einstein (though also
very likely discovering others of comparably immense productive
talent who would otherwise have subserviently swept floors forever or,
for that matter, died at any early age of malnutrition).

Of course in circumstances where the consequences of decisions are
complicated and not readily apparent, there is a need for expertise.

But economic choice entails that we both determine and evaluate
consequences. Those with expertise in a matter may well predict the
consequences of a decision far more accurately than non-experts
could. But those affected by a matter will know best whether they
prefer one outcome to another. So, while the need for efficiency

requires an important role for experts in determining complicated
consequences, efficiency also requires that those who will be affected
determine which consequences they prefer. And of course experts
don't just decide things, they also have skills—like precise hands for
doing brain surgery, so I do not want a surgeon to decide for me
whether I should have surgery, but I do want the surgeon to do the
cutting, not myself or another citizen.

This means if we seek to attain optimal choices, it is just as misguided
to keep those affected by decisions from making them (after experts
have analyzed and debated consequences) as it is to prevent experts
from explaining and debating consequences of complicated choices
before those affected register their desires.

Self-managed decision-making, defined as decision-making input in
proportion to the degree one is affected by the outcome, does not
eliminate experts but does confine experts to their proper role and
keep them from usurping a role that it is neither fair, democratic, nor
efficient. That it obstructs proper attentiveness to experts is not a
viable critique of establishing balanced job complexes, because it does
not, in fact, do so.

Consumers' Councils and
Remuneration for Effort and Sacrifice

Every individual, family, or living unit would belong to a neighborhood
consumption council. Each neighborhood council would belong to a
federation of neighborhood councils representing an area the size of a
ward or rural county. Each ward would belong to a city consumption
council, each city and county council would belong to a state council,
and each state council would belong to the national consumption
council. The major purpose for this nesting of consumer councils is to
allow for the fact that different kinds of consumption affect different
numbers of people. Failure to arrange for all those affected by
consumption activities to participate in choosing them not only implies
a loss of self-management, but, if the preferences of some are
disregarded or misrepresented, a loss of accurate, appropriate
accounting of preferences as well. One of the serious liabilities of
markets is their systematic failure to allow for the expression of desires
for social consumption on an equal footing with the expression of
desires for private consumption. Having the different levels of
federations participate on an equal footing in the participatory
planning procedure prevents such a bias from occurring in a
participatory economy.

Members of neighborhood councils present consumption requests
accompanied by effort ratings done by their workplace peers in accord
with norms established there. Using indicative prices the social burden
of each proposal is calculated. While no consumption request justified
by an effort rating is denied by a neighborhood consumption council
without very good reason (as in, for example, a request for machine
guns or large quantities of poison, etc.), neighbors could express an
opinion that a request was unwise, and neighborhood councils could
also approve requests on the basis of need in addition to effort.
Individuals could "borrow" or "save" by consuming more or less than
warranted by their effort level for the year, and anyone wishing to
submit an anonymous request for collective consumption could do so.

The major questions are whether "to each according to effort" is fair,
and whether this distributive maxim is consistent with efficiency.

Capitalist economies embody the distributive maxim: "to each
according to the value of his or her personal contribution and the
contribution of property owned." Public enterprise market economies
operate according to the maxim: "to each according to the value of his
or her personal contribution." In a participatory economy the only
reason people would have different levels of consumption would be
differences in work effort or differences in need in the event of special
circumstances. By effort we mean anything that constitutes a personal
sacrifice for the purpose of providing socially useful goods and
services. If work complexes were truly balanced for desirability, and if
everyone worked at the same intensity, then effort could be measured
in terms of the number of hours worked. For variation in intensity,
there is reward. In other circumstances, effort could take the form of
working at a less pleasant or more dangerous job, or undergoing
training that was less agreeable than the average training process.

Socialists have long argued that consumption rights derived from the
ownership of productive property are unjustified. Beside the simple
fact that they generate grossly unequal consumption opportunities, the
usual rationale is that those who receive the extra income did little, if
anything, to deserve it. They neither contributed more to the value of
social production through their own labor than others, nor underwent
any greater personal sacrifice than others. But in Capitalism and
Freedom, the right-wing Nobel Prize-winning economist Milton
Friedman pointed out the hypocrisy of denouncing income differentials
due to differences in ownership of property while tolerating
differentials due to differences in talent. "Is there any greater ethical
justification for the high returns to the individual who inherits from his
parents a peculiar voice for which there is a great demand than for the
high returns to the individual who inherits property?" Friedman asked.

Friedman, of course, was arguing in favor of both genetic and financial
inheritance. But his challenge is still a legitimate one. In our view, the
honest answer to Friedman's challenge is "no.” Despite the historical
fact that private ownership of productive property has generated
considerably more economic injustice than differential talent has, there
is nothing more fair about the birth lottery than the inheritance lottery.
Greater personal sacrifice made in the production of socially beneficial
goods and services is legitimate grounds for greater access to those
goods and services. But neither ownership of property nor possession
of talent that makes it possible to produce more valuable goods and
services carries any moral weight, in our view.

As stated earlier, we believe this creates an ethical dilemma for those
who support public enterprise market systems. If wages are
determined via the market some will earn more than others who work
longer and harder. But if wages are set according to effort by a
dynamic overriding market wage determinations, markets will assign
prices that deviate from the true social opportunity costs of goods,
yielding a price system that systematically misjudges social costs and
benefits (even worse than other market failures cause it to). There is
no way around this dilemma in an economy with a free labor market.

In contrast, in a participatory economy, while individuals consume
according to their work effort, users of scarce labor resources are
accounted according to the actual value of those resources, their
opportunity costs, via the mechanisms of participatory planning. This
avoids the contradiction between equity and allocative efficiency
intrinsic to a market economy.

But what about the common view that rewarding according to the
value of one's personal contribution provides efficient incentives while
rewarding according to effort does not?

Differences in the value of people's contributions arise from differences
in talent, training, job placement, luck, and effort. Once we clarify that
"effort" includes personal sacrifices incurred in training, the only factor
influencing performance over which an individual has any control is
effort. By definition, neither talent nor luck can be induced by reward.
Rewarding the occupant of a job for the contribution inherent in the job
itself does not enhance performance. And if training is undertaken at
public rather than private expense, no reward is required to induce
people to seek training. In sum, if we include a training component in
our definition of effort, the only discretionary factor influencing
performance is effort, and the only factor we should reward to enhance
performance is effort. Not only is rewarding effort consistent with
efficiency, but rewarding the combined effects of talent, training

incurred at public not private expense, job placement, luck, and effort,
is not.

Participatory Planning

The participants in participatory planning are the workers' councils and
federations, the consumers' councils and federations, and various
Iteration Facilitation Boards (IFBs). Conceptually, the planning
procedure is quite simple. An IFB announces what we call "indicative
prices" for all goods, resources, categories of labor, and capital.
Consumers' councils and federations respond with consumption
proposals taking the indicative prices of final goods and services as
estimates of the social cost of providing them. Workers councils and
federations respond with production proposals listing the outputs they
would make available and the inputs they would need to produce
them, again, taking the indicative prices as estimates of the social
benefits of outputs and true opportunity costs of inputs. An IFB then
calculates the excess demand or supply for each good and adjusts the
indicative price for the good up, or down, in light of the excess demand
or supply, and in accord with socially agreed algorithms. Using the new
indicative prices, consumers and workers councils and federations
revise and resubmit their proposals.

The procedure whittles overly optimistic and otherwise infeasible
proposals down to a feasible plan primarily in two different ways. To
achieve the approval of other consumer councils who regard their
initial requests as greedy, consumers requesting more than their effort
ratings warrant are forced to reduce or shift their requests to less
socially costly items. To win the approval of other workers, workers'
councils whose proposals have lower than average social benefit to
social cost ratios are forced to increase either their efforts or their
efficiency. Both workers and consumers easily access not only
indicative prices which summaries the whole economic picture, but
qualitative and descriptive data as well. As iterations proceed,
proposals move closer to mutual feasibility and indicative prices move
closer to true social opportunity costs. Since no participant in the
planning procedure enjoys an advantage over others, the procedure
generates equity and efficiency simultaneously. Social deliberations in
councils arrive at sensible proposals for collective consumption in light
of true opportunity costs including incorporating desirable refinements
that reduce ill effects and expand positive effects. As to possible
worries about the possibility of adverse by-products or other
implications of participatory planning overriding its benefits, we will
consider these in coming chapters.

Conclusion

The issue at hand is in our view quite simple: a participatory economy
is built on workers and consumers councils, balanced job complexes,
remuneration for effort and sacrifice, participatory planning, and self-
managed decision-making. It therefore rejects private ownership of the
means of production, corporate workplace organization and markets
and/or central planning. In place of rule over workers by capitalists or
by coordinators, parecon is an economy in which workers and
consumers together cooperatively determine their economic options
and benefit from them in ways fostering equity, solidarity, diversity,
and self-management. Parecon is classless.

The choice that parecon poses can be summarized as follows:

1 Do we want to try and measure the value of each person's
contribution to social production and allow individuals to benefit from
social production in tune with that, or even with their bargaining power
or property, or do we want to base any differences in consumption
rights only on differences in personal sacrifices made in producing
goods and services? In other words, do we want an economy that
implements the norm "to each according to the value of his or her
personal contribution, property, or power" or an economy that obeys
the norm "to each according to his or her effort?"

2 Do we want few people to conceive and coordinate the work of
many? Or do we want everyone to have the opportunity to participate
in economic decisions to the degree they are affected by the outcomes
of those decisions? In other words, do we want to continue to organize
work according to corporate hierarchies, or do we want council
democracy plus job complexes that are balanced for empowerment?

3 Do we want a structure for expressing consumer preferences that
is biased in favor of individual consumption over social consumption?
Or do we want it to be as easy to register preferences for social as for
individual consumption? In other words, do we want consumers to
compete with each other as atomized buyers, or to cooperate in nested
federations of consumer councils?

4 Do we want economic decisions to be determined by competition
between groups pitted against one another for their well-being and
survival? Or do we want to plan our joint endeavors democratically,
equitably, and efficiently? In other words, do we want to abdicate

economic decision-making to the market or do we want to embrace
participatory planning?

In this book and in greater detail in Quiet Revolution in Welfare
Economics (Princeton University Press, 1990), and also online at
www.parecon.org, we have explained why markets are incompatible
with equity and systematically destructive of solidarity. We have
explained why market economies will continue to destroy the
environment, and why a radical view of social life implies that external
effects are the rule rather than the exception, which means that
markets routinely misjudge social costs and benefits and misallocate
scarce productive resources. And we have explained that while
markets may fulfill the liberal vision of individual economic freedom to
dispose of one's personal capabilities and property however one
chooses, they are inconsistent with the radical goal of self¬
management for everyone.

In conclusion of this summary, we believe those who reconcile
themselves to market "socialist" or other coordinatorist models do so
illogically and unnecessarily. The choice is illogical because the
negative experience of authoritarian planning in no way rebuts the
potential of participatory planning. The choice is unnecessary because
the vision of an equitable, democratic economy that promotes
solidarity among its participants is as attractive and appealing as ever,
and now has substance.

10

Evaluating Parecon

Works are of value only if they give rise to better ones.

— William Von Humboldt

In part I, we offered as guiding values equity, solidarity, diversity, self¬
management, fulfillment and development, and classlessness. We
evaluated centrally important economic institutions and then also
capitalism, market and centrally planned socialism/coordinatorism),
and bioregionalism, and we rejected all these models as obstructing
our preferred values.

Having now presented participatory economics, it is appropriate to
briefly assess it as well. How does participatory economics fare vis-a-
vis equity, solidarity, diversity, self-management, fulfillment and

development, and classlessness? Of course, having conceived parecon
with these values as our guides, it won't be that surprising that in our
view it meets them with flying colors. The daunting question will be
whether it has other failings that compromise these merits. That will be
the subject of part IV, where we will take up the diverse criticisms
people have expressed about parecon, and reply as best we are able.

Equity

What is equity, after all? As good a definition as any is that equity is a
condition in which each person gets what they deserve for what they
have done, and no one gets more (or less) than that. Of course, this
begs the question of the meaning of "deserve.”

We have already dealt with "deservedness" at such great length that
almost anything said here would be severely redundant. Parecon
rewards effort and sacrifice. If one thinks that doing that is just, one
will favor parecon on this score. If one thinks instead that rewarding a
deed to property is just, one certainly won't favor parecon as
equitable. Likewise, if one thinks that rewarding output—or luck, talent,
or training insofar as they contribute to output—is just, as compared to
rewarding only effort/sacrifice or even in addition to rewarding
effort/sacrifice, again one will not favor parecon. If one thinks
rewarding power is just, of course, one won't favor parecon.

Similarly, parecon equilibrates conditions of work so that all people
have equally fulfilling work lives, or, failing that, parecon compensates
those with less than average conditions by rewarding them
proportionately more. Again, if one favors equity as we have defined
it—that people's economic income and circumstances should together
be comparably desirable—and if one believes that the right index for
detailed equilibration is effort/sacrifice, one will favor the parecon
model.

In parecon there is no mechanism to accrue property or bargaining
power and no means to use either to increase income. There is no way
to translate luck of genetic endowment or of relative position into
greater income. There is no way to have better circumstances and not
have income reduced, or, if one has worse circumstances, to not have
income enlarged. The economy only materially rewards effort and
sacrifice.

It follows that if we adhere to the same equity standard with which we
rejected various other economic systems earlier, parecon succeeds

admirably. In a participatory economy not every person will get
precisely his or her due all the time, but deviations will not be
systemic, will not enrich any one sector at another sector's expense,
and will occur due to errors of judgment sometimes idiosyncratic spite,
but not due to system-induced differentials.

Solidarity

Solidarity implies that individuals in an economy respect one another's
circumstances and well-being as part of economic life. It means that
economic activity promotes social ties and empathy rather than having
an antisocial effect. Participatory planning is designed to attain
solidarity. Each person gains increased income only by exerting more
effort than they did before or by everyone's base income increasing at
once. No one can increase their income by taking a share that would
otherwise go to someone else. We do not increase our income by
diminishing that of others, but only in concert with others. And
similarly, we improve our conditions of work if our balanced job
complex improves and not otherwise. But if my average job complex
improves, by definition everyone else's average improves as well.

When one person gains, everyone gains.

These attributes are already so singularly different from typical
capitalist dynamics as to provide an overwhelming argument for
parecon. But if we look deeper, will the gloss fade? Consider trying to
make a choice among various investment proposals in your workplace
or in the economy as a whole. What criteria do you use to judge
whether one innovation is better than another? Let's suppose you are a
greedy individual with no concern for others. In that case, the answer
will be that you will consider solely the impact of the innovation on
your own job and income. But in a participatory economy an innovation
will affect your income only via its impact on the overall social product
and the average social product per person. Even to cast a greedy
ballot, you have to assess the social good. People may disagree about
which choice will have a better social impact, and mistakes will
certainly be made, but in a parecon the mode by which we all advance
is inexorably social, not antisocial.

What about job circumstances? The logic is identical. An innovation in
your own workplace is not more valuable to you than an innovation
elsewhere if the distant one has a better impact on average job
complexes than the near one. We each gain when the overall average
improves, so to seek gain we must each pay attention to the average.

The bottom line is simple and striking: in market systems if
compassionate people wish to get ahead they are compelled to do
antisocial things. In a parecon, even antisocial people, if they want to
get ahead, must do socially positive things. The market system breeds
instrumentalist, competitive attitudes that destroy solidarity even
among those personally inclined to be empathetic. The participatory
economic system fosters solidarity and empathy even among
otherwise egocentric and antisocial people. Of course, this was a
central criterion in constructing participatory economics. The final
proof of parecon's worthiness will be whether parecon scores as well
when we address issues that weren't firmly in mind during its
conception, our focus in part IV of this book.

Diversity

Regarding diversity, there should be diverse economic options for us to
choose among to enrich our lives. Additionally, we shouldn't have our
choices among diverse options narrowed by some pressure
independent of our own inclinations. So there should be great diversity
not only in options available, but also in what different people consume
or in the jobs they opt for from among available options. We should
have a diversity in outcomes reflecting our diversity in preferences.
Each person has many options and remains a unique individual in
selecting them, making his or her own choices that reflect his or her
own unique dispositions, talents, and inclinations, and not some
conforming pressure from without.

For example, in a society fostering diversity, we anticipate there would
be no homogenizing pressures causing large numbers of people to
settle on just a few options among many, attaining similar situations
not because they all have similar personal preferences, but because
they all caved in to similar overriding pressures. We all drink water and
that is certainly not a sign of conforming to pressure. It reveals,
instead, a fundamental similarity that derives from our natures. We all
wear clothes, and that too is not a mark of onerous homogenization
but of benign common history and conditions. But if many of us wear a
uniform not out of unbiased agreement on its aesthetic or practical
appeal, but to indicate that we are like others wearing it—because to
do otherwise would be to suffer a loss—there is a loss of diversity due
to a homogenizing pressure. Or, if out of all possible genres of music
the population divides into those who like country, those who like
classical, those who like rap, and those who like rock, and if what a
person likes can be predicted by attributes that have nothing to do
with their actual freely developed musical tastes, but instead reflect

only the impact of structurally imposed identities having literally
nothing to do with music, then we can reasonably deduce that a
homogenizing effect has diminished diversity and limited individual
choices. Diversity is a subtle matter, but not entirely impossible to
assess.

Another dimension of diversity is that in decision-making attention
should be paid to the possibility for error and therefore diverse
alternatives should be explored alongside preferred choices, even after
a preferred option is chosen, or should at least be kept open for future
exploration. This is done to preclude all actors from becoming
embedded in an irreversible trajectory of choice that limits future
possibilities or diminishes the quality of future outcomes. Put
colloquially, we should rarely put all our eggs in one basket. So how
does a parecon score in terms of diversity?

Relative to other economies, some causes of difference are removed,
which could be seen by some as reducing options and therefore
reducing diversity. A parecon does not have capitalists and
coordinators and workers, but only economic actors. Class
differentiation therefore disappears. Likewise, in a parecon, you cannot
choose to hire wage slaves nor to sell yourself as a wage slave. These
options too are gone. In a parecon you cannot parlay productive
genetic attributes into greater income or power, another lost option.
And there is a sense in which these changes may seem to some to
reduce diversity since we have gone from having three classes to
having none. But in our view this is like the sense in which instances of
capitalism reduced diversity by removing the option to own a slave or
be a king—not exactly great failings. Looking deeper, in the parecon
case, it is not only a matter of removing bad options, there is also an
offsetting increase in diversity. That is, if a society has classes, each
actor is part of a group that has interests contrary to those in other
groups. This collective confrontation, and the commonality of internal
class conditions together lead to homogenization within classes even
as they force competition among them. If we hold up babies in the
hospital and report about them merely what class their parents are in
and we then ask people to predict what tastes and preferences the
baby will have later in life, under capitalism we will guess right in a
remarkable proportion of cases about a remarkable number of life
choices. This means that being in a class narrows the range of choice
that a person winds up with. It makes some outcomes highly probable
regardless of all other attributes of each baby—whether innate
attributes or due to unfolding (unbiased) life experiences. In parecon,
with no classes, the homogenizing effects of class membership are
gone.

The scorecard for how diversity is upheld in a parecon is positive on
other counts as well. Not only are class homogenization effects
eliminated, but parecon self-consciously favors respect for minority
positions and gives defeated views of minorities every opportunity to
persist to insure against majorities making mistakes. This is built into
participatory planning, by preserving past data and by the checks on
indicative prices that qualitative information and the initial phases of
each new round of planning provide.

In contrast, a central but rarely discussed failure of markets is that
because they ignore the fact that people's preferences are affected by
economic circumstances, if a population is confronted by offerings for
which some prices set too high and some set too low relative to actual
social costs and benefits—then in a market system preferences will
bend toward the latter and away from the former. This inaccurate
bending of people's true desires will in turn further propel the incorrect
prices in the wrong direction, and so on, in a snowball effect. The key
point is that this market phenomenon is not random. There is always a
systematic mis-pricing of goods with positive or negative external
effects. People in the system become increasingly individualistic due to
increasingly favoring private consumption over consumption of goods
with public benefits beyond what a true comparison of personal and
collective benefit would warrant had there been proper initial pricing.
Because market systems promote pursuit of profit, not of social well¬
being, there is no pressure for anyone to notice and curtail such
developments. Capitalists see profits to be had producing mis-priced
goods and follow that path mercilessly. People's consumption
preferences become skewed in accord.

Participatory planning, in contrast, impedes such phenomena in the
two ways mentioned earlier. First, it properly values items by taking
into account all social and individual factors. Deviations from proper
pricing derive from honest mistakes and not systematic biases built
into the allocation system. Second, participatory planning re-calibrates
valuations and behavior with every new planning period precisely to
guard against prices snowballing away from what they should be due
to past errors persisting into future periods. It synchronizes tastes and
behavior consistent with independently presented preferences. The
goal is social well-being and not private profits.

A participatory economy cannot, of course, guarantee perfect
adherence to diversity. For one thing, it is critical that other sectors of
society also promote diversity, especially a society's cultural
institutions. For another thing, no system precludes all biases, much
less all errors. But what we can say about parecon is that the most
egregious contemporary economic pressures for conformity are

removed. No more class conformity, prices snowballing away from true
representation of preferences, or profit-seeking that takes advantage
of any opportunity, however socially counter productive. In their place
parecon elevates diversity to a central value, employs decision-making
that permits and even welcomes attention to minority views, properly
values economic products, recognizes economic impact on consumer
and producer preferences, and self-consciously avoids irrational pricing
trajectories.

It might be that affirmative action will be deemed necessary even in a
parecon in order to eradicate lingering manifestations or continuing
effects of racism or sexism. Parecon doesn't prejudge this, but parecon
is not inconsistent with such programs, and could indeed facilitate
them. Because jobs won't vary by income or empowerment,
economically there won't even be a lowest-paying or least-rewarding
employment for one race or gender to be consigned to. Because
parecon freely disseminates qualitative economic information, racial
and gender equity can be made as important a goal as society wishes.

Self-Management

How does parecon fare regarding people's degree of influence over the
decisions that affect them?

Parecon decisions are made by whatever method best allows each
person to affect each decision in proportion to how much the outcome
of the decision affects them. Can this be done perfectly all the time? Of
course not. But does parecon provide context, information, and
motivations in accord with this aim? Yes, it is a defining feature.

Within a workplace there are two broad kinds of decisions. The first
involves establishing plans for the unit. Should we invest in improving
our workplace? How much output, produced by how many people,
should be our goal? The second kind of decision involves how we
accomplish each month, week, and day what we have set out to do.

Consumption decisions are similarly broad: what do I want collectively
for the groups I am part of, and what do I want for myself, individually?
And having received what I wanted, now what do I do with it?

Allocation, decisions are broadly about what level of work and output
should be enacted, what exchange rates should exist among items,
and therefore what relative amounts should be produced, who should

get what income, and various choices of implementation such as those
concerning facilitation boards.

So at risk of some repetition, let's briefly consider each domain in
terms of its rating vis-a-vis self-management.

Production

In the workplace we have councils that vary in size from work teams to
industries. This facilitates people's interactions at each level of
autonomous or collective involvement. If a plant decides together on
some action that delimits aims for a specific work team, decisions for
how that team then accomplishes those aims may be over- whelmingly
its own affair. If so, the team's council will make decisions internally
adhering to the norms that guide the whole workplace. But within a
whole workplace, division, or team, how does each participant make
such decisions?

There is no single answer for all workplaces or even universally within
each given workplace. Decisions have different spectrums of impact.
For one thing, most of our work decisions affect not only our workplace
and those in it, but everyone who will consume our products. Our
production utilizes inputs that could have been used to produce other
things that might meet other needs, so consumers need a degree of
say in what goes on in production, just as producers have an impact, of
course, on what consumers can opt for. Should consumers of VCRs
have some degree of say even over what a peanut factory produces?
Yes, because if the peanut factory makes soy nuts, chicken farmers
have less soy feed, which increases beef output, which affects leather
production, which reduces some plastic production, which reduces
economies of scale in plastic production, which raises the price of
VCRs. Mediating this complicated interrelationship of production and
consumption is allocation—in our case participatory planning—and we
will assess the self-management implications of such planning below.
For now, assuming consumers and workers elsewhere have
appropriate input into decisions in a specific workplace, what about
workers in that workplace themselves?

Some decisions overwhelmingly affect only me. Some affect only you.
Some affect only a specific work team and each member equally; some
affect that team, but each member unequally. And there are the same
variations for projects, divisions, the whole workplace, or even the
whole industry. The point is, there is no single decision-making process

that can universally deliver influence in proportion to impact for every
person, every time. What is needed is instead what parecon delivers:

• The organization of all actors into appropriately defined
subgroups.

• Giving each of these decision/work units, or production
councils an appropriate amount of say.

• Decisions having been allotted in that manner to various levels
of council, in turn using appropriate processes within councils at
each level: Sometimes one-person one-vote with majority rule,
sometimes two-thirds majority, sometimes each actor having a
veto, in each case with suitable time given to advance
preparation for decisions, to assessment and reassessment, or to
minority voices holding up final choices or experimenting with
parallel explorations.

All in all, we can't say that a parecon will perfectly succeed in properly
allotting influence over every production decision. What we can say,
however, is that there is no structural impediment to doing so and
there is every possible admonition and structural pressure on behalf of
doing so. For example, a parecon does not have corporate hierarchies
that essentially subordinate typically 80 percent of the population to
having little or no say over their work, giving about 19 percent
considerable say over everyone's work, though ultimately subordinate
to an all powerful top 1 percent. Parecon in contrast facilitates
proportionate say, allows the redress of mistakes, and balances
empowerment and income properly. It is hard to see how a system
without workplace councils, balanced job complexes, and remuneration
for effort and sacrifice could do better in providing participatory self¬
management to its workers— assuming that the workers not only have
this flexible array of conditions in their own workplaces, but also have
proper input into allocation decisions, which we assess below. But first,
what about consumption?

Consumption

Consumption is an economic activity that has inputs and outputs and
that is, in this respect, abstractly the same as production. And the
decision dynamics of consumption are similar to those of production as
well. Again, we have layers of councils designed to group people with
shared decision-making affinity such as individuals, families,
neighborhoods, and counties. Again, decisions are apportioned to
these councils and within them in accord with impact on the group or
individuals involved. As with production, consumers collectively

establish appropriate processes for different types of decisions within
the appropriate level of consumer council, having only the norm of self¬
management in common. The system is not perfect, but there is no
systematic obstacle to everyone involved having proportionate say,
and as in the production case, consumers have every incentive to seek
proportionate say up to not spending too much time trying to add the
last dimple of accuracy to every accounting, as against getting on with
life.

In a parecon, each individual largely determines his or her own
personal consumption, and the impact of each person's preferences
registers in the indicative prices that contextualize all choices. Each
collective has nearly sole say over what they propose to collectively
consume, though if there are effects in wider constituencies, the
proposal will have to be reviewed at that level as well.

There are two ways in which personal or group choices can affect
others, and why, therefore, others should be able to influence the final
decision. On the one hand, there is the obvious implication that if I am
going to consume a bicycle, someone must produce it. My choice is not
without implications for those who do the work of producing it.

Likewise, if I consume it, then the inputs needed to produce it aren't
available for producing some other product that someone else may
have wanted.

If we assume, for the moment, that allocation proportionately accounts
for the mutual impact of different production and consumption
decisions, and that consumption councils likewise accurately apportion
influence over the consumers' share of each such decision, what about
the fact that once I get my consumption items and decide how to
consume them, there could be effects on others from that as well, so
that perhaps others should have had a say in whether, indeed, I got
them in the first place.

Suppose I ask for not much milk or juice, but so much brandy and
vodka that quite obviously I am or will become an alcoholic (or a
dispensary), but even so the total volume of brandy and vodka sought
by our council is fine in the view of producers. This is not a problem for
producers, but my choice will likely adversely impact my family, my
neighbors, and my community. The same would hold if I was about to
purchase lots of firearms, say ... or an outdoor sound system
appropriate for a stadium but not for my backyard that abuts many
other backyards. It is good that the prices of these items reflect their
broader social implications, but perhaps not good enough. These
choices could all be okay from the broad standpoint of allocation writ
large, yet not okay viewed more locally.

The point is, consumption has diverse external effects and those
effects can be globally small and fine, yet simultaneously locally large
and adverse. Some of these effects are broad and general and
accommodated by the participatory planning system most broadly.

The overall price of alcohol reflects its average social and health
impacts, as does the overall price of products that pollute. But with
some products even with proper valuation in the large, specific
apportionments can still be horribly adverse due to contingent local
effects. So parecon includes the provision that consumption council
members can collectively assess individual consumption orders,
indicating their displeasure with specific ones that have harsh negative
external implications, seeking remedies that may require additional
expenses, and in the extreme case even collectively precluding such
options from being met, when appropriate.

In other words, a neighborhood could see a private order for huge
quantities of alcohol, or guns, or for a raucous outdoor sound system,
and, even though the neighborhood's citizens are not over consuming
in total, and even though producers are ready to supply the products in
the quantity requested, and even though the people making the orders
are within their budgets, nonetheless the neighborhood could
intervene and first ask for an explanation (maybe the alcohol is
medicinal or for household chemistry experiments, or maybe the guns
are for an abstract art display, or maybe the sound system is for parts
that are going to be put to an entirely different and benign or very
positive purpose), and then, if the explanations are found wanting,
literally forbid these types of purchases within these collective units.
This is comparable to contemporary zoning laws saying that you
cannot disturb the peace, for example—but in the parecon case it is
democratic and without profit-seeking, and the details are organized to
reflect the recognition that those impacted by decisions should
influence them proportionately. Moreover, the specific individual
consumption requests and the dialog about them can be anonymous.

All in all, therefore, as with production similarly for consumption:
Organization into councils facilitates appropriate levels of self-
managed oversight and influence. The system urges self-managing
decision processes and it provides means to continually reassess and
improve them. But what about allocation? Does allocation matter to
self-management? If so, why and how?

Allocation

Consider having workers' and consumers' councils plus all parecon's
admonitions about attaining self-management, but on top of that
employing markets for allocation. Markets would not provide proper
valuations or qualitative information that would enable workers or
consumers to develop and decide on agendas. Markets would compel
workers and consumers to make competitive choices regardless of or
even against others' interests and even their own inclinations. Markets
would require firms to win market share and thereby maintain or
increase their workers' incomes even at the expense of their own
quality of work life. Markets would apportion influence over decisions in
accordance with income levels, and income levels would deviate from
a just distribution due to luck, circumstance, tools, genetic endowment,
and bargaining power, and while none of these factors have much to
do with how much someone is affected by a decision, yet they
determine how much say each person gets. Markets only consider the
impact of a decision to buy or sell on the buyer or seller (in proportion
to their relative bargaining power) ignoring the impact the decision
would also have on others due to production or consumption
externalities. For these reasons, markets would psychologically,
behaviorally, and materially subvert self-managing tendencies even of
council organization.

But what about participatory planning? What level of influence does
participatory planning afford each actor in each decision?

First we should note that participatory planning reverses each of the
above-mentioned failings of markets. Participatory planning provides
accurate valuations by properly accounting full personal and social
costs and benefits and providing appropriate qualitative information for
regularly re-calibrating indicative prices with qualitative data. It
ensures that workers and consumers pay attention to one another's
conditions and allow each to advance only in accord with the others
advancing, by making sure incomes and conditions correspond to
social averages. It permits workers to assess their own conditions and
pay attention to these in their decision-making by having workers input
their preferences via their councils and with no need to maximize
anything but their own and other's well being rather than having to
subvert their own interests and those of others to stay in business. It
apportions income in accord with effort, and, in any event, does not
force or even permit people to try to maximize profits, surplus, or even
revenues. It incorporates attention to all social costs and benefits of
transactions, including externalities, by means of the planning
procedures, accounting modes, iteration boards, and levels of council
structure.

Still, while it is good to remove these various critical impediments to
sensible allocation-related decision-making, this is not the same as
having positively accomplished truly democratic decision- making.

Does participatory planning give producers and consumers
proportionate say over each type of decision as well as possible?

There are two main issues. First, does participatory planning create a
context that is consistent with or that propels people to have
appropriate impact in non-allocation decision-making? Or does it
differentiate among individuals such that even beyond allocation their
differences adversely affect their impacts? Second, specifically
regarding allocation, does each participant have input in proportion to
how they are affected?

For the first point, participatory planning requires of buyers and sellers
attention to decision-making in general, instills expectations that each
will influence decisions and not be subordinate or domineering, draws
out the personal traits commensurate to involvement, and introduces
no advantages or disadvantages to any group of people that would
interfere with their proper participation in non-allocation interactions.

For the second point, regarding allocation decisions, each person
participates at every level—personal, group or team, unit, industry,
neighborhood, county, etc.—by means of council structures that have
appropriate influence at that level. Each person manifests his or her
individual or collective preferences in ways identical to everyone else.
Each registers desire or not—to do some production or undertake some
consumption, thus affecting that production or that consumption—and
does so in accordance with their own desires and without inappropriate
power due to inappropriate income or workplace authority. Consider
the level of production of bicycles. Each consumer influences this in
accord with their desire for bicycles (how much they are affected by
them) as does every other. So does each bicycle worker impact this
decision in accord with how they assess their involvement, and the
workers have effectively the same overall impact in the outcome as
the consumers, each group in essence negotiating with the other. But
what about those consuming other goods that are affected by the
number of bicycles to be produced, or producing other goods needed
for bicycles or replaced by them? As you can see, this is a generalized
problem of intersecting implications and impacts. It is one of those
cases where a mathematician can provide a very subtle and detailed
analysis, requiring pages upon pages of arcane formulae
demonstrating the result—or where we can arrive at it more quickly
and intuitively. Which factors cause/facilitate impact? Only factors
equally possessed by every actor, and which each actor will manifest
up to the socially designated influence of their decision-making unit

and their preferences, each with the same rights and opportunities
that others have. It will not always occur perfectly, of course. But it is
hard to see how one could attain the desired goal more closely, overall,
and on average.

Classlessness

Parecon eliminates class division by removing economic differences
that empower some actors and weaken others, that enrich some and
impoverish others, or that pit some systematically against any others.
The class-related innovations of parecon are that:

• First, there is no private ownership of means of production. All
actors have the same ownership relations to economic assets as
all others.

• Second, there is no longer corporate organizational structure.

In its place balanced job complexes eliminate systematic
differentiations bearing on power or income due to a division of
labor. And these are fostered and nurtured by the allocation
mechanisms, rather than subverted and replaced by hier- archies
of command.

• And finally, third, parecon establishes remuneration according
to effort and sacrifice. While some people may exert more in
their labors and others less, so that people have different
incomes, there is no competition for income, no exploitation of
some people by others, and there is a limit, in any case, on how
much more effort anyone could possibly exert and therefore
earn.

In parecon there is no class of owners that occupies a level above
others—no capitalists. There is no commanding class above others —
no coordinators. There is no obedient class beneath others—no
working class. This is the case because there is no privately held
capital, no monopolization of empowering circumstances, and no group
that occupies a position subordinate to others in the economy. In
participatory economics, there are only people who contribute to
economic output and who by virtue of doing so have a just claim on it
(or who physically cannot participate but have that claim by virtue of
being human), who all have the same ownership condition in the
economy, who all toil at balanced job complexes, and who all therefore
are economic producers and consumers, without class differentiations.

Part III

Daily Life in a Participatory

Economy

The love of money as a possession—as distinguished from the love of money as a
means to the enjoyments and realities of life—will be recognized for what it is, a
somewhat disgusting morbidity, one of those semi-criminal, semi-pathological
propensities which one hands over with a shudder to the specialists in mental

disease.

— John Maynard Keynes

To provide texture and definition to the broad picture of parecon that
prior chapters presented, the next three chapters describe plausible
details of daily life relations in a variety of hypothetical parecon
economies and institutions. We hope these chapters fill out our picture
of parecon, but they don't add new general content. Some people like
more abstract presentations, as in prior chapters. Some people prefer
more textured and specific descriptions, as in this section. One or the
other approach will be sufficient for some people, who may feel wading
through both is overkill. The content in this section is adapted from an
earlier book by Robin Hahnel and myself, Looking Forward (South End
Press), that was prepared just over ten years ago. The material here
has been updated for this presentation.

Chapter 11
Working

Suppose that humans happen to be so constructed that they desire the opportunity
for freely undertaken productive work. Suppose that they want to be free from the
meddling of technocrats and commissars, bankers and tycoons, mad bombers who
engage in psychological tests of will with peasants defending their homes, behavioral
scientists who can't tell a pigeon from a poet, or anyone else who tries to wish
freedom and dignity out of existence or beat them into oblivion.

— Noam Chomsky

We have described parecon's institutions and made a preliminary case
that they are both desirable and possible. We focused on large-scale,
general attributes. What would a participatory economy look like from
the vantage point of people's daily lives? Of course it would change

from one type of ownership, organization, remuneration, and decision¬
making to another. Of course it would display large-scale implications
for equity, self-management, solidarity, diversity, and class structure.
But what about the specific daily economic situations of workers and
consumers?

Consider how workers in a book publishing enterprise define and
assign tasks. (I start with publishing because my own experience of
helping found and define South End Press was impacted by and in turn
enriched my understanding of participatory economic work-place
relations.) Publishing always involves editorial, production, and
accounting work, each of these including tasks ranging from rote to
conceptual and repetitive to diverse. But workers can organize and
carry out these and more general maintenance tasks in different ways
in different economies.

Capitalist Publishing

The criteria capitalist publishing uses to determine how to combine
diverse tasks into job complexes are profitability and maintaining
hierarchies of power and income. Each book is a commodity to be sold
for maximum revenue and produced at minimum cost. Whether people
read the book is incidental.

Capitalist budgeting maximizes profits by holding off small creditors,
taking advantage of new authors who lack bargaining power, and when
possible setting high prices for few offerings. Will consumers buy their
how-to book or ours, their romance or ours, their 90-day diet fad or
ours, are central considerations. Given society's race, class, political,
and gender biases, what shibboleths must be observed? Given
reviewers' attitudes, which books are likely to be discussed? Which
books should we give up for dead? To be sure, many people enter the
publishing field committed to promoting humane values. But the
dynamics of the capitalist market require first one compromise, then
another, until humane values are buried by profits.

Jobs are defined, behavior patterns enforced, pay scales determined,
and pink slips and promotions dispersed all to preserve hierarchy and
extract sufficient labor to keep the business profitable. Employers
"respect" prior repressive attitudes of more dominant new employees.
Social hierarchies born outside the firm thereby reappear inside. Most
women do what is considered "women's work." Most blacks do what is
considered "blacks' work." Cleaning "girls," secretaries, receptionists,
typesetters, and cleaning "boys” do the most deadening work. For

their above average effort and sacrifice they receive the lowest wages.
Even more than other oppressive attributes, two bear special
comment.

1 The broader creative powers of most workers steadily erode as
most people adapt the quality of their efforts to the low level of their
assignments and influence.

2 Everyone's emotional energies dissipate in efforts to rationalize
and defend status and hierarchy.

The result is considerable waste of human resources, immoral denial of
most workers' capacities, and reduction of the publishing function to
that of producing commodities for a quick killing. (And all this typifies
one of the nicest industries to work in that capitalism offers.)

Participatory Publishing: Northstart Press

Naturally, the hypothetical pareconist Northstart Press organizes jobs
to accomplish tasks efficiently and at high quality. But Northstart's
participatory priorities also require that all workers exercise their
talents and express their wills.

Instead of selling books to make profits, Northstart's workers consider
themselves successful when readers are entertained or enlightened.
Northstart workers choose among manuscript sub- missions by
deciding whether readers will benefit sufficiently to merit the
resources, time, and energy required to publish the book in question.
No one's income is correlated to volume of sales.

Writing, editing, and design occur largely as before parecon but we can
imagine that to save trees and other resources and to reduce onerous
tasks, most books might be electrically conveyed to portable book-size
hand-held computers that have the heft, look, and feel of traditional
books but allow readers to alter the size, layout, design, and resolution
of the book's pages on their system. Only volumes of special merit or
specific orders would be printed and bound traditionally, reducing
preparation and distribution costs dramatically, protecting scarce
resources, and providing consumers easy, direct, and nearly free
access to whole libraries of information. Computer programs also
facilitate easy manipulation of graphics, charts, type style and size,
and page alignment, so people can adapt pages to their own
preferences. While some of these technical changes would occur in a
capitalist future, many would not or would be channeled less desirably,

to avoid conflict with profitability and preserve hierarchy. Whether they
will occur in a parecon future will be determined solely in light of their
human and social effects on work, consumption, libraries, bookstores,
the ecology, and the reading experience.

Many business tasks would also differ in a participatory publishing
house. Due to technological innovations, most North- start filling of
orders and tracking of inventory occurs electronically. Large
warehouses are no longer necessary. Oversupply with subsequent
shredding is eradicated. Workers who fulfill customers' orders maintain
records of how many people access different titles, since this
information is useful to authors, researchers, and Northstart
employees.

Regarding promoting and publicizing titles, participatory publishers
would help potential readers decide whether they want to take a closer
look at titles, but there would be no effort to trick people into "buying"
books they couldn't benefit from. Participatory workers would not want
to waste resources, energy, or time producing inferior products. With
this in mind, Northstart sends informative promotional messages to
people most likely to enjoy, appreciate, or learn from new titles, but is
not interested in enticing readers who won't benefit.

Similarly, the Northstart finance/budget department oversees
scheduling within limits set by council decision-making. Financial and
budgetary work differs from familiar capitalist norms in both data
handling and data dissemination because guiding values are different.

In a capitalist firm, data assembled by the finance/budget department
is restricted so that only top managers and owners have access. Were
non-privileged workers able to access such infor- mation, they might
use it to better gauge what wages to demand or when they might best
strike.

In contrast, at Northstart everyone works with any information they
choose. Not only can those who work in promotion access budget data,
so can those in fulfillment, and people in fulfillment and promotion can
access data from each other's departments as well. It is not productive
for everyone to analyze all data endlessly. But it is desirable to
organize information so every actor can understand Northstart's
operations and experiment with projections.

Job Complexes

What other changes might result from participatory organization? The
most fundamental structural change is that each Northstart worker has
a job complex that includes some editorial, some production, and some
business responsibilities and encompassing roughly average positive
and negative work attributes. The total array of tasks associated with
producing play scripts, for example, is divided among a team so that
each member has comparable tasks. Similarly, the editorial team
working on novels allocates editing, working with authors, and
soliciting new novels so that everyone gets to use their special talents
in different ways that fulfill their particular interests, but also so that no
one enjoys an unfair abundance of creative tasks or gets stuck with an
excess of numbing tasks.

Instead of having head editors, proofreaders, and secretaries, each
parecon editorial team has equal members who fulfill diverse
responsibilities suited to their own tastes and talents. One person
might do more copy-editing and another might take more notes, but
conceptual work would not be allocated mainly to one set of people
and rote work mainly to another.

Education in a society with a parecon would have to provide its citizens
with the skills, knowledge, and experience essential to playing a
creative, self-managing role in the special fields of their choice. In
capitalism, in contrast, schools prepare most citizens—the 80 percent
who wind up wage slaves and not coordinators or capitalists—to
endure boredom and expect to take orders.

Councils

Beyond equitable job definition, there is also a council of all Northstart
workers, where each member has equal voice and vote, as well as
smaller councils responsible for appropriate sub-areas such as editing
and producing fiction, general nonfiction, and technical books. Still
smaller overlapping councils represent each business division. A
variety of teams prepares particular books or researches a particular
reorganization of workplace technology, for example. In assigning
special jobs, there is no need to make work the same for everybody at
every moment. Equity comes on average and over reasonable spans of
time, as when individuals get vacations at different times or spend
months doing a time- consuming creative project and catch up on rote
tasks later.

Northstart's yearly plan evolves through negotiations that occur each
May. Decisions are made about how many plays, novels, and books to

accept and release during the year, and about workload, materials
needed, work allocation, hiring new workers, and establishing new
rules and technologies. Initial proposals come from all participants in
the economy, go through a number of revisions, and finally are shaped
into a feasible plan, including a work plan for Northstart. Northstart
budget and finance workers facilitate this iterative process at each
stage by providing useful data and suggestions to all Northstart
workers. No one expects everyone to have the same priorities, nor is it
assumed that everyone will agree that the final plan is the best
possible one. But all will agree that it was arrived at fairly, with
everyone having appropriate proportional influence.

Northstart's proposals are altered from iteration to iteration by a
process of give-and-take guided by information from other councils.
Finance/budget workers facilitate the updating and are overseen by
the whole Northstart council. Once a plan for the upcoming year is
determined, work for the new period begins.

As the year progresses, most decisions are taken within particular
Northstart teams and councils, though some require ratification by the
whole Northstart council and others require the approval of industry or
consumer councils. Decisions of different types utilize different
procedures, sometimes consensus, sometimes one-person-one-vote
majority rule, or two-thirds, etc. But none of this implies that every
decision is equally everyone's affair. Sometimes people delegate
authority and autonomy to others with whom they work. Participatory
organization allows democracy without intrusiveness.

In a participatory workplace, of course, there may be males and
females, homosexuals and heterosexuals, blacks, whites, Asians, and
Native Americans, Catholics, Protestants, Muslims, and Jews. But
Northstart employees recognize that the cultural diversity that
members of different social groups bring to work should be allowed to
express itself in the context of job complexes balanced for
empowerment and agreeableness. To help ensure this, every month
optional caucus meetings discuss whether any workplace issues affect
minority group interests. Workplace caucuses have auton- omous
rights to challenge arrangements they believe are sexually or racially
oppressive. But since the rationale for these requirements stems from
theories of kinship and community relations and not from a theory of
economic relations, we do not address the justification for employing
such caucuses in further detail here.

Finally, notice that nothing in what we have described precludes
exercising leadership. At Northstart, production leaders on particular
books exert influence over team members regarding quality and pace

of work necessary to get the books completed. Finance department
decisions have authority regarding budgeting. People working in
personnel exert leadership over disputes about job assignments.
Editorial decisions determine what is published.

Similarly, not having an editor-in-chief does not mean there is no editor
with final responsibility for particular titles. Rejecting a fixed hierarchy
does not imply rejecting discipline, monitoring, evaluation, and
accountable leadership. Moreover, even as in capitalist companies, the
ultimate sanction of dismissal still exists, but with crucial differences.
First, the decision is made democratically, not by individuals with
ownership rights or vested authority. Second, the threat of dismissal
does not endanger the employee's survival. Other employment
opportunities are offered, and a person's basic consumption needs are
in any event guaranteed when looking for new work. Moreover,
dismissal has to be ratified by the individual's council co-workers and
then, if appealed, by higher councils as well, assuming such
procedures were chosen.

To get a better picture we need to describe actual workdays. So here is
a typical average week at the Northstart publishing house—
remembering, of course, that many of the features are optional and
might be handled differently in other firms, even in the same industry.

Larry's Work Week

On Wednesday Larry helps sort mail for a few hours. He does this one
morning every tenth week. On Wednesday and Friday next week, for
two hours he will help with general clean-up. The following Wednesday
Larry will work the front desk, Friday he will do some rote data entry
work. Next month Larry has a different rotation, but he always has
some rote tasks assigned on Wednesday and Friday mornings. Of
course, should Larry want to trade responsibilities for a certain
Wednesday or Friday to attend his child's school play or tennis
tournament, for example, this would be fine. Larry's rote work is
evaluated by other Northstart members responsible for intervening if
unscheduled task switching interrupts orderly functions.

The council for producing drama books has six work teams and Larry's
does production on Wednesday, Thursday, and Friday afternoons.
Although many employees prefer working on only one production
project at a time, Larry happens to like doing a variety of different
tasks simultaneously so he's currently working on one drama as
typesetter, one as designer, and a third as a proofreader. The design

and proofing are done in teams of three, and Larry is team leader for
design.

On alternate Monday afternoons, Larry's editorial council meets first in
teams for an hour and then as a whole department for two more hours
to address concerns about possible new titles, com- plaints, and
suggestions. Each week Larry also reads his share of submissions.

Each title that Larry reads is also read by another member of the team
and, after they give a summary report, if they both agree to reject the
book it is returned to its author—unless some other member wishes to
hold onto the title for whatever reason. If both Larry and the other
reader want others to read it, the submission is held. If they disagree, a
team vote decides whether to reject the title or keep it for more
serious evaluation. In other publishing houses of course other
approaches might be adopted.

Each week, Larry also works on his allotment of manuscripts that have
passed initial evaluation. Which manuscripts he reads depends partly
on his preferences and partly on how much time he and other
members have for new assignments. Ultimately, books are accepted or
rejected after everyone is ready to vote. Of course there is appropriate
discussion to ensure that everyone is able to air their sentiments and
exert proportionate influence in the vote. Three-quarters support is
needed to accept a submission, and serious attention is paid to the
feelings of minorities even to the point of holding up decisions for
further debate. Another very particular norm (if Northstart is small) is
that any single member can veto up to two books a year, even against
three-quarter support, if they feel strongly enough. This is because in a
small press every book project affects each employee dramatically in
that if an employee really despised a book it would be a serious
hardship for him or her. The point is, various decision-making methods
are utilized to balance the efficient disposition of tasks with providing
participants proportionate influence taking into account the actual
circumstances involved.

Once accepted, each title goes to a particular team member, who
becomes its editor. Larry has responsibility for editorial work on three
titles yearly.

On the Mondays that Larry doesn't have editorial meetings he
sometimes attends the bi-weekly Northstart policy meeting as a
representative of his editorial/production council. Each of the three
editorial/production councils, the four business area councils, and any
major policy work teams that happen to be functioning at the moment
send representatives. Representatives serve for six meetings each
year, with rotation staggered so that each council always has a

representative who has attended at least the four previous meetings.
At these sessions, personnel representatives report on problems,
sometimes asking for help with interpersonal conflicts, and the general
progress of the press's efforts is discussed and evaluated. On the
Tuesday following policy meetings, editorial and business councils
meet for an hour to hear reports. Special teams discuss reports
whenever they can arrange time.

The rest of Larry's work concerns promotion. He is currently helping
produce a new catalog, working with potential authors, and soliciting
new plays. He schedules all this into his work week, along with
cleaning his own office, updating his own files, and impromptu clerical
tasks shared with others.

Details of Northstart's arrangement seem sensible to Larry and his
workmates, but may not appeal to other publishing houses. Different
workplaces could adopt longer or shorter time-lines for job
assignments and meeting schedules and adapt other practices leading
to less or even more varied job complexes. While basic principles must
be respected in all parecon workplaces, how they are implemented
changes from workplace to workplace due to different conditions and
preferences.

To continue, Larry is gay and meets every fourth Thursday with other
gay workers to discuss the character of editorial and business
decisions and the changing patterns of daily work in light of the
particular needs, tastes, and values of gay employees. Suggestions are
often brought back to work teams and councils and sometimes to the
whole Northstart collective. If these caucuses feel threatened by
proposals otherwise supported by majorities of workers at North- start,
they may bring their complaints to outside councils for political
adjudication. And of course Larry doesn't work only at Northstart.
Rather, Northstart has an above average average job complex, so
Larry does some rote work in the neighborhood and community where
he lives to attain an overall balance. But what about workplace
decision making under capitalism or in a parecon?

Decision-Making at a Capitalist Firm

How does a capitalist firm decide how much to produce, who will work
at what jobs, how much work each person will do, how to alter
products or introduce new ones, what investments to make in the firm,
and other matters?

In a capitalist firm the lordly capitalists have ultimate authority. Those
in the coordinator class have jobs that are overwhelmingly
empowering and they administer and otherwise define daily
operations. Workers have jobs that are overwhelmingly low-level and
uncreative. They obey, or resist.

The owners are interested in profits and in maintaining the conditions
that allow them to accrue profits. Markets impose these motives on
them. If the firm doesn't maximize the surplus available after it sells
what it produces, and if it doesn't utilize a considerable portion of its
surplus to enhance its market share, not only will owners complain for
want of profits, but other firms will gain technological or market-share
advantages which, in the future, will cause the low profitability firm to
suffer grave loses or even bankruptcy. So owners wish to reduce costs
(including wages), to disempower workers so the workers do not try to
battle owner's agendas or raise their wages, to increase productivity
per asset, to dodge expenses for by-products such as pollution, to raise
prices and increase sales regardless of the impact on those buying the
products, and to invest profitably in competition with other firms. But
the owners cannot oversee every aspect of workplace activity and
must hire special intermediate employees who we call coordinators,
who will, they hope, pass on commands or even help in formulating
them.

Thus we have the coordinator class of managers, lawyers, accountants,
engineers, and others who are empowered by their positions and
responsible for much daily decision-making and definition of workplace
structure and activity. But these coordinators turn out to have dual
interests. On the one hand, as employees hired by owners, they can
try to improve their incomes and conditions by carrying out the
owners' agendas. On the other hand, they have the potential to
advance their own careers by using their monopoly over knowledge
and decision-making levers to their own advantage even in ways that
are sometimes at odds with profitability, but for which owners cannot
punish them because coordinators hold hostage the operations of the
firm.

Then we have workers hired to carry out the will of those above. They
also have dual interests. On the one hand, as employees hired by
coordinators at the behest of owners, they can try to advance their
incomes and conditions by pleasing their employers. On the other
hand, they can utilize their numbers and organizational might,
including the threat to strike, to try to increase their incomes and
improve their conditions even against the interests of their employers
and managers.

So what about decisions? Markets establish the context. Owners will
seek profits and maintain the conditions of their dominance, including
reducing the incomes and power of those below to whatever extent
possible. Coordinators will to some extent obey owners in pursuing
profitability, and to some extent seek to enhance their own
independent power against both owners above and workers below.
Workers will to some extent obey coordinators out of fear of being
punished or fired, and to some extent seek to enhance their own
independent power.

Thus, decisions are overwhelmingly authoritarian. Either the owners
decree them, or some subset of the coordinators (managers, division
heads, vice-presidents) decree them, overseen more or less by the
owners above. Those most affected, the workers and consumers, have
marginal if any impact, often not even knowing what decisions are
being made, when, where, and to what ends. This holds for the large
scale—what we should produce, in what quantity, to sell at what price,
paying what wages, using what ingredients, with what pollution which
we avoid responsibility for by what avenues, and so on. And it holds for
the small scale—what time and for how long do workers get a lunch
break, when can they go to the bathroom and for how long, and so on.
The overwhelming context of decision-making is the market-enforced
capitalist drive to maximize surplus, accumulate profits, and invest in
enlarging market share regardless of the social benefits and costs to
workers and consumers. Less operative is the coordinators' drive to
enhance their own relative bargaining position by gaining ever greater
control of critical information and contacts and of the workforce below,
even against profitability. Opposing the defining logic of the system
are workers' efforts to improve their incomes and circumstances
against the obstacles of coordinators and owners above. Missing is
unconflicted attention to the actual opportunities for personal
fulfillment and growth that workplace processes and products could
have on all concerned.

If the reader sees an analogy to a politically dictatorial system ... that
is perfectly apt. In Stalinist Russia, for example, we had the inner
sanctums of the ruling party and the dictator himself, then the
functionaries and political operatives of the bureaucracy, then the
populace. We decry this as horrific in its authoritarian subordination of
the many to the few. But the capitalist workplace is quite similar—with
the owner or owners, the coordinator class of empowered employees,
and the subordinate working class—and the degree of regimentation in
the capitalist workplace is, if anything, more severe. Not even Stalin's
dictatorship thought to oversee meal times and bathroom breaks and
to examine all mail and calls. There is nearly absolute
disenfranchisement at the bottom of a corporation, even more than the

political disenfranchisement of citizens in dictatorships. And where
political subordination is enforced by the threat of incarceration,
corporate subordination is enforced by the threat of impoverishment
and even starvation. In both the dictatorship and the capitalist
corporation there is risky pursuit of personal power in the middle—
political or economic palace intrigue—and domineering authority at the
top.

Decision-Making at Northstart

Every firm in a parecon makes day-to-day decisions about how to fulfill
the firm's agreed responsibilities. These are made within councils with
appropriate input from everyone affected. Different methods may be
used for different decisions. We could spend time detailing such
interactions for hypothetical cases—how a work team schedules its
work, how the firm decides on hiring, and so on. But there is one facet
of decision-making more unique to parecon and probably more
instructive to detail, and which in any event sets the context in which
more specific and narrow choices must occur— participatory planning.
What does the participatory planning process look like at Northstart
publishing house?

Last Year at Northstart

When workers begin their yearly planning, first they review the prior
year's plan and particularly any changes from the initial proposal. They
understand that work always uses inputs, including social relations in
the workplace, workers with specific skills and social characteristics,
and resources, equipment, and intermediate goods. Work also
generates outputs, including social relations, personalities, and skills of
workers as well as products others will use. Workers' plans thus always
include three lists: material and social/personal inputs; work relations,
policies, motivations and logic; and material and personal/social
outputs.

Then, regarding the composition of these lists, more outputs require
more inputs, certain work relations choices require more inputs for
given outputs, and a different mix of inputs with a fixed set of work
relations may yield different outputs.

Primary outputs are computer records of books, communication of
books to readers, relationships with readers, and changes in worker

attributes and plant social relations. Secondary products include some
bound books, waste materials, used equipment, and leftover supplies
of paper and other materials. Primary inputs are workers' skills and
efforts, plant social relations, utilities such as gas, water, electricity,
and communication, a building, old equipment, new equipment, paper,
and office supplies like light bulbs and pencils.

Inputs are broken into roughly two major categories: investment goods
which allow alteration of the scale or methods of production, and
normal production inputs which allow operations at a chosen scale with
determined social relations. The main work related choices are to
determine how work will be organized, how many hours will be
expended each day, and what technologies will be employed. Any
change of work relations will likely require some changes in inputs and
outputs, and vice versa.

One way to envision these relations would be to graph outputs for
varying combinations of inputs for each possible choice of technology
and work relations. A more practical tool for analysis would be simple
programs showing inputs required per outputs preferred for possible
work relations. These programs would facilitate estimating workplace
plans by helping workers highlight how choices affect productive
possibilities.

Any Northstart worker can call up a computer screen view of such a
program, enter choices for technology and work relations, and see
which inputs will yield a given list of outputs, or what outputs a given
list of inputs will generate. No sophisticated programming knowledge is
required. The assumption that a simple program can incorporate
alternative choices of social relations is not so reductionist as it may at
first seem to some readers. We imply only that the program, properly
prepared by iteration workers, can quickly show the best estimates of
the material implications of alternative options. It could even list the
qualitative features that differ from option to option, as these were
determined by workers themselves and entered in the program by
facilitation workers before the planning period. Of course, when people
finally vote on options, the program only facilitates manipulating
information. Workers' feelings about the implications of the different
choices guide the decisions they make.

Next, a brief plant meeting informs everyone of national iteration
facilitation board (IFB) projections of trends for the coming year,
including initial projections for overall growth, incomes, and indicative
prices; as well as industry IFB projections, including qualitative
summaries of publishing's impact on readers last year, explanations of
changes expected this year; and plant IFB proposals for changes in

plant organization, technologies, or policies, including detailed
descriptions of human and social implications of projected changes in
material inputs and outputs.

Assuming long-term investment decisions have already been settled,
in assessing last year's data and this year's projections workers begin
weighing their own desires and prepare to register the social relations,
technology, and input and output levels they prefer for Northstart. The
first and second round of plant decision-making requires workers to
choose individually, with no requirement that their selections be
mutually compatible.

Northstart Innovations

Before following Northstart's planning further, however, we should
note one very important aspect of settling on plant organization and
technology. Each worker decides the alterations in plant operations
she or he wants to request and registers related preferences for
investments. The ensuing changes might, for example, diminish the
output-to-input ratio to improve the quality of work life, or might
change how much work she or he has to do given the demand for
books. Whatever changes Northstart workers finally decide they want,
they also have to get an okay from the system as a whole if they need
additional inputs from outside sources.

The important thing to note is that if Northstart workers request and
receive significant workplace changes that dramatically improve the
quality of work life at Northstart, this benefit will eventually be shared
with other workers. How much work anyone does away from his or her
main workplace depends on differences between the quality of work at
that main workplace and society's average. Thus, when innovations
significantly decrease how burdensome work is at one plant, the result,
after job balancing committees have time to assess the change, will
likely be that each employee spends fewer hours at that plant and
more hours elsewhere. Innovations that make Northstart a relatively
more pleasurable place to work will change the time Northstart
workers work there and elsewhere. So because of the principle that all
workers enjoy comparable overall job responsibilities, gains accruing
from Northstart investments manifest themselves in slightly improved
conditions for all workers rather than in dramatically improved
conditions only for Northstart employees. Therefore, workers have little
reason to urge innovations in their own plants at the expense of
innovations that could be enacted elsewhere with a more dramatic
effect on overall quality of work life.

Traditional economists will argue that this will diminish workers'
incentives to improve the quality of work life, since workers will not
monopolize the gains they engineer. But this view conveniently ignores
that in competitive models of capitalism, technological gains are
assumed to spread instantaneously to all producers in an industry. If
this were not assumed, it could not be claimed that these models yield
efficient results. But when this is assumed, incentives to innovate
diminish since benefits spread first to other firms in the industry, and
later through lower costs of production and lower price for the
industry's output, to all producers and consumers. Of course, in real
capitalism, as opposed to economists' models, improvements do not
spread and the benefits of innovation accrue almost exclusively to a
small number of owners—certainly not to workers—and there are
consequent inefficiencies. In any case, since in an equitable economy
technological improvements must rebound to everyone's benefit, we
consider it a virtue that in a parecon innovations in thousands of plants
change the overall societal average workload and work quality norms,
and that those changes in turn rebound equally to everyone's benefit.

So what does this lead to in practice? If Larry works at Northstart and a
proposal for a technological change there and throughout publishing
would improve the average job complex for society by one hundredth
of a percent, while a proposal for the steel industry (requiring the same
investment expenditure) would improve the average by two
hundredths of a percent, Larry will eventually benefit more from the
steel innovation than from the publishing change. Likewise, Northstart
workers have a greater long-term interest in an innovation in coal
mining that greatly improves that industry's quality of work than in an
innovation in publishing that would require an equivalent investment
but improve the quality of publishing work to a lesser degree.

Larry's tastes are therefore added to those of all other publishing
workers and embodied in the evaluation of possible publishing industry
alterations before any comparison with other industry proposals
occurs. If Larry's views differ dramatically from the collective result,
Larry will not necessarily like the final outcome. But the choice will
reflect a fair balance of the tastes of all workers in both industries.

Larry should vote as he likes, and if he does so, and all other workers
do so as well, the collective implications noted earlier will apply. The
war of each against all for who will benefit from innovations gives way
to a community of shared interests. Competition is replaced by
cooperation. Shortening work hours to achieve the same output
anywhere eventually benefits all. Improving work life anywhere
eventually benefits all. An equitable economy requires all this, but to
increase individual incentives job balancing committees could calibrate
the speed of adjustments to provide temporary "material incentives"

to innovators. Or, alternatively, and more positively in my view, teams
could be assigned whose job was to develop potential innovations.
Innovations would be the "output" by which their social usefulness
would be judged. The equity implications of this way to stimulate
innovation—essentially assigning more resources to innovation and
holding those who use them socially accountable—has desirable
human repercussions. In any event, in deciding on innovations, each
person chooses between proposals as they wish, but everyone has an
incentive to choose what is best for the whole economy because that is
what is ultimately best for all. Ironically, the claim made for markets—
that pursuit of individual interests coincides with the social interest—
actually holds for participatory planning. Pursuit of self-fulfillment
under equitable arrangements in a socially conscious way really does
yield socially optimal outcomes.

Parecon's solidarity does not derive from a presumed biological
transformation of our genetic characteristics, but from the concrete
implications of its social relationships. Results promoting solidarity,
equity, diversity, and collective self-management are not due to a
postulated suddenly beatific human nature, but arise from the
structure and incentives of participatory planning. Besides linking
individual and collective well being, parecon promotes sociability and
the qualitative side of life denigrated by capitalism.

The First Planning Iteration: Nancy's Initial Proposal

Nancy has worked at Northstart for eight years and is predominantly
concerned with science books and promotion. In preparing her initial
proposal for Northstart's new year she considers three proposals for
reorganization that workers who investigate innovations have
proposed. While recognizing that Northstart already has an above
average work complex, Nancy believes plan three would greatly
improve work quality by freeing energies from distracting tasks with
modest investment. She estimates that while the changes in proposal
three are not as valuable as some proposed transformations in heavy
industries she has heard about, proposal three would be worthwhile
compared to most innovations under consideration throughout the
economy.

Indeed, a projected minimum standard that proposed investment
should attain in increased output or improved work conditions is part of
the information the national production facilitation board would
provide. Wherever workers are considering changes in work
organization or new technologies, differences in inputs, outputs, and

work quality would need to be assessed. Obviously, any proposal that
improves work quality with no loss in outputs and no investment
expense would be noncontroversial since it would improve the national
work complex average at no cost. However, whenever investment is
necessary to improve work complexes or increase output there must
be some way to decide which investments would be sufficiently
beneficial to undertake. The national production facilitation board, by
estimating per capita growth and anticipated change in the average
work complex, provides an initial and also regularly updated estimates
of the minimal returns needed from investments to make them
desirable.

All workers at Northstart have access to computers on which they can
make calculations and comparisons. Returning to our example, after
consulting projections, Nancy decides to develop her first proposal
based on implementing investment plan three. She next decides on a
level of output, in other words, how many titles to publish in the
coming year. She could just accept facilitation board suggestions.
Instead, however, considering data on population growth, industry IFB
predictions of likely growth in numbers of titles desired and in average
readership per title, and her own perceptions of people's changing
tastes in reading, Nancy decides industry predictions are a bit too
modest and settles on a first proposal to increase titles published by
3.5 percent rather than the IFB projected 3.3 percent, and of readers
by 1.2 percent instead of the IFB projected 1.1 percent.

To translate her estimates into a full proposal for Northstart, Nancy
next settles on a number of employees, hours of work per day, and
effort levels at Northstart. User friendly computer programs make it
easy to enter workplace proposal number three, set a number of titles
and readers, and then enter choices for any two of the other variables
to see what the third must be to get the job done.

It is important to note that the kinds of thinking Nancy has to do
become easier with familiarity, and, in any event, the programs make
the associated calculations simple. In any case, Nancy has arrived at
her first round proposal for Northstart for the coming year. What about
other workers? And how does a final plan arise?

The Second Planning Iteration

Not only Nancy but all workers at Northstart and throughout the
economy complete their initial proposals and submit these to the
"planning data bank." Individuals have made no attempt to

accommodate their proposals to one another but once submitted, IFBs
work on the data and prepare a report of current proposed supply and
demand for all goods, changes in indicative prices based on relative
degrees of excess demand or supply, a summary of current averages
for consumption and production, and written descriptions of the
principal causes of changes in IFB projections.

Of particular importance to Northstart workers are the current
proposals for goods that appear in the Northstart budget. Therefore,
these are highlighted in written reports provided to Northstart workers,
as are summaries of written reports from consumers regarding books.
For example, since consumers are requesting more new titles than the
industry suggested producing, the industry receives a written summary
of consumer commentary regarding books. Although Northstart
workers and consumers automatically receive this material, they can
gain access to similar data for other industries at any computer
console in their plant or community.

If Nancy wishes to see a more detailed breakdown of demand by
region or even by specific consumer councils, she can use the
summary provided by the iteration boards as a general guide and
investigate details herself, using procedures we describe shortly. In
addition to getting feedback important for her planning decisions, such
inquiries also give Nancy an indication of the social value of her labors
and the implications of her choices for others.

Let's return to the planning process. Having noticed that paper is in
over-demand and paper producers have proposed no increase in
production over last year, Nancy requests the paper industry's own
report explaining their proposal. Then, in response to all the
information she has accessed, a new set of indicative prices, and
whatever consultations and investigations she wishes to undertake,
Nancy updates her first proposal. The process is the same as the first
except that she now takes into account the new information. We
should note, however, that in line with our particular description of this
society's planning system, Nancy alters the components of her first
proposal in any direction and by any amounts she chooses. The issue,
of course, is whether we can expect Nancy in combination with other
actors to behave in ways that will bring demand and supply into
balance for all items in a reasonable time frame. We address this
question in our treatment of the daily life character of allocation, still to
come, since it involves the whole allocation process. But since the
indicative prices of goods in excess demand will rise and of goods in
excess supply will fall, and since there is social pressure to reduce the
overall value of requests (and increase the overall value of output), it is

not difficult to see the fundamental mechanism that drives the system
toward eventual agreement between supply and demand.

The Third Planning Iteration

After Nancy and everyone else submit second proposals, IFBs again
adjust indicative prices, update their own projections, send relevant
summary reports to all units, and store all this information in the
planning data bank. The new wrinkle is that in addition to industry IFB
reports on industry proposals and averages, there are also industry IFB
projections for likely final industry plans, as well as suggestions to
member units regarding how they might best move toward these likely
final outcomes. In instances where a unit diverges dramatically from
industry averages, discussions may commence between that plant's
board and IFBs to explore the reasons for the differences.

Labor reallocations to and from Northstart are now largely settled. This
means that in going over new data and considering how to alter
proposals for goods in over-demand or, less often, over-supply, Nancy
can only alter her proposals for particular items that Northstart would
use or produce by less than 50 percent if she wants to move them in
the direction that equilibrates supply and demand, and by less than 25
percent if her proposed change is disequilibrating. And this rule applies
as well—at least in this hypothetical rendition of a specific
implementation of participatory planning—for developing proposals
numbers four through six, discussed below.

Preparing her third proposal, however, also involves Nancy in many
more discussions with workmates. While each Northstart worker still
makes his or her own proposals for all of Northstart, unlike in earlier
rounds, they now incorporate modifications arising from collective
discussion. Thus, one day of meetings in work groups and departments
is set aside for discussing proposals. Like many other details in this
discussion, the rules for changing proposals for each new iteration and
for carrying out planning within workplaces seem reasonable to us
(particularly in societies in which there is considerable friction when
moving resources from one use to another), but keep in mind that this
is just one possible choice of procedures rather arbitrarily chosen to
illustrate one plausible implementation of participatory planning.

The Fourth, Fifth, and Sixth Planning Iterations

Now, Nancy and her coworkers confront a new challenge: Their fourth
proposals will be made not separately but together. The different ideas
of Northstart workers must finally be combined into one consistent
Northstart proposal. It isn't necessary for each individual's role in the
proposal to be spelled out, since such assignments are irrelevant to the
rest of the economy. But workers' councils' proposals do need to be
implementable. So the same limitations on adjustments that applied
for the third proposal now apply to the collective new Northstart
proposal.

The formulation of the fourth proposal requires various sessions held
intermittently over a full week, though it is certainly part-time work so
other work also continues. Mainly, a week allows sufficient time for
thinking before plant members choose a new proposal.

First members of the smallest work groups compare their individual
proposals and try to accommodate them with one another. These
meetings serve primarily as a warm-up for more important department
and area meetings to come.

Here's how it might work. Nancy has a small group meeting on Monday
of "fourth-proposal week." On Tuesday she meets with the editorial
department to talk about numbers of titles and readership to try to
reach agreement on these matters. On Wednesday, she has a similar
meeting with the promotion department, the site of her non-editorial,
non-production work. Throughout Northstart, others hold similar
meetings, and the Northstart IFB summarizes and distributes each
day's results. Monday's meeting is limited to an hour, but those on
Tuesday and Wednesday run for an hour and a half in the morning and
another hour and a half late in the day.

The editorial meeting begins with members listing the number of new
Northstart titles each prefers to undertake, the readership they
anticipate, and the mix of different titles they desire. Debate
commences regarding the difference between initial averages of
proposals and current demands and projected industry averages. Since
each editorial group meets separately, the Northstart IFB reports each
group's results as well as an average for them all.

The following day Nancy's promotion group starts with the overall
average as a premise and suggests its own adaptations in light of
promotion needs and potentials. Because all departments do this on
Wednesday, there emerges a new average to be considered Thursday.
Finally, a council meeting on Friday functions like a senate with
members considering amendments to the average as a means of

developing competing alternatives and finally voting for Northstart's
proposal to submit for the fourth iteration.

One important feature of this process is the effort made to
accommodate competing perspectives through compromises or
experimentation. This is the time when minorities provide evidence of
the virtues of their positions.

The fifth and sixth iterations would proceed like the fourth, but with
each taking much less time and incorporating tighter allowed
percentage changes in inputs and outputs. For each new proposal
there is new information about the status of goods, average outputs,
and indicative prices, all facilitating moving toward a feasible plan.

The Seventh Planning Iteration

After receiving the sixth proposals from production and consumption
units, industry and national IFBs have a new task (in this hypothetical
rendition of one way to enact parecon methods): they consider
available data and offer five feasible plans for society to choose
among. Since we will discuss IFBs more when we focus on the
intricacies of allocation later, here we simply assume they do their task
well and present society with five proposals. But we should mention
that IFB worksheets and minutes of their meetings are available to
anyone with computer access.

Obviously, the choice of five plans—like many other details of the
process we are describing—could be varied without changing the
underlying logic of participatory planning. There could be fewer
individual iterations or more collective ones, or there could be
limitations on adjustments or submission of council-wide rather than
individual proposals could begin earlier or later. In a real society, such
refinements would evolve in accord with particular economic, cultural,
and social histories, since once citizens agree that participatory
planning has potential, they will modify the system to suit themselves.

In any event, in our hypothetical scenario, after a period for discussion
and thought, everyone votes for one of the five proposed plans. The
votes are tallied in each council, submitted to higher level federations
as sub-level totals, and tallied again, and so on, until final results are
available—likely within a couple of hours.

In this rendition of procedures, the two proposals that receive the least
votes on the first ballot are dropped. IFBs amend the remaining three

proposals in light of the relative weight of the votes. A second ballot
eliminates the least popular of the three, and then the two remaining
choices are slightly amended, a final choice is made, and the chosen
option becomes not the plan, but the seventh aggregated projection of
the iteration process. IFBs then use this projection to calculate
expected indicative prices, total economic product, growth rate,
average work and consumption, and outputs for individual goods, all of
which are sent to the plan data bank.

Nancy and other members of Northstart (and other economic units)
now accept as benchmarks the projections for society's product and
average workload, consumption allowance, and work complex quality.
Further revisions adjust responsibilities within federations and units in
light of the overall plan.

Northstart Efficiency

The reader may wonder:

1 Aren't Northstart workers frustrated because work is too
fragmented? Is this a road to enrichment or psychosis?

2 Doesn't it take endless hours to train people for so many jobs? Is
this excellence or institutionalized chaos?

3 Don't people ignore the authority of "leaders” on team A, when
these same "leaders” are subordinate on team B?

4 Do one's co-workers provide enough motivation and oversight to
prevent shoddy, dilatory work?

In answer to question one—doesn't fragmentation frustrate North- start
workers?—first, having many responsibilities makes work life richer
and more diverse for most people and is therefore positive, not
negative. Of course, tasks and schedules could be fragmented to the
point of distraction, but if a group decides it has gone overboard, it has
only to make the required correction. Likewise, those who like fewer
types of tasks would simply opt for job complexes with more nearly
average tasks.

Changing from capitalism to parecon would mean that instead of most
people doing rote work and being bored most of the time, everyone
will spend at least some of their work day doing interesting work.
Moreover, because boring tasks will be distributed equitably, they will

be more bearable. It's not that digging ditches, pushing buttons, or
enduring hot conditions will become joyful merely because one does it
in a good society, at one's own pace, and in teams with friends, much
less because one admires some great leader or fondly remembers a
long-passed revolutionary upheaval. It's only that pain can be
diminished and pleasure enhanced even for rote work by overcoming
unnecessarily authoritarian, alien- ating, unfair, and uninformed facets
of work life.

Moreover, there will be every reason to automate or eliminate rote
work whenever doing so will enhance productivity or diminish the
human burden of work. Under capitalism automation is a crucial area
of conflict between labor and capital—capitalists seek to enhance
profits by automating some people's livelihood out of existence while
workers try to defend their jobs to avoid becoming obsolete and
unemployed. Under parecon, since everyone does a fair share of rote
work, all will want to minimize it. Since everyone does some creative
work, everyone will want to increase the amount to go around and no
one will lose their livelihood if automation eliminates rote tasks
workers disliked in the first place.

Thus, question one really comes down to what happens to people who
under capitalism have responsibilities which are almost entirely
interesting and empowering. Yes, in participatory work- places such
work complexes will disappear because everyone will share rote work.
Elementary justice dictates this, just as elem- entary justice dictates
that consumption opportunities greatly in excess of average
consumption be eliminated. Those who have benefitted from
coordinator monopolization of desirable work will resist job balancing
just as capitalists who monopolize wealth will resist income balancing.
Both capitalists and coordinators will advance arguments to justify
their advantages but the truth in both cases is that these arguments
are fanciful, self-serving ration- alizations. In fact, even those who now
do no rote work need not be any more fragmented by having to do
some cleaning, filing, and production. For under systems in which they
monopolize desirable work opportunities, these people are constantly
distracted by having to always oversee others even as they regulate
their own behavior in the presence of superiors. Anyway, anyone who
knows anything about business in capitalism knows that upper-level
workers spend much of the time they are not worrying about protocol,
daydreaming, gossiping on the phone, and worrying about interoffice
competitions. Beside being a waste of productive talent, compared to
leisure options, this is not even a particularly enjoyable way to idle
time away.

In answer to question two—doesn't it take endless hours to train
people for balanced job complexes?—at Northstart training every- one
to do editorial, business, and production work admittedly takes more
time than training people to do just one of the three types of work.
Likewise, developing skill in three areas certainly takes longer than
developing skill in only one. But the mutually enforcing benefits of
knowing more about each type of work, the enrichment that comes
from having diverse responsibilities, and the increase in morale that
accompanies understanding the whole publishing process more than
offset these additional training costs.

Or, it may happen that workers in a particular workplace might prefer
the savings from reduced training over the benefits of greater
diversity, knowledge, and morale. In these cases, provided equitable
job complexes can be arranged in which each worker has fewer
differently skilled responsibilities, workers can choose that option. Our
description was only one possibility, after all.

But what if doing a rote task means that Larry has less time for X and
might therefore be less good at X. Say Larry edits social science books.
If he did only that, he would read 50 social science books a year; but
because of rote task obligations, he reads 25. He is now not as
knowledgeable a social science editor as he might otherwise have
been. The offsetting gain is that Sally, who now reads 25 social science
books a year, when in the past she read zero, is a lot better social
science editor than she was before when she was not an editor at all.
Are the combined skills of Larry and Sally at least as good as Larry's
alone would have been, without the change? Probably. If not, is the
loss more significant than the gains made from not having to spend
time defending hierarchies and related useless activities? Not likely.
And if it were, would avoiding this small residue loss in productivity
justify putting up with a class-divided society and all its adverse
implications? In our view, of course not.

In answer to question three—won't useful, necessary lines of authority
deteriorate without fixed hierarchies?—respect for a team leader need
not be undercut because she is in a non-leader role on other teams. At
Northstart, respect for leaders depends on the logic of particular
assignments and the need for tight coordination, supervision, or
scheduling, for example. Far from diminishing the credibility of
legitimate leadership, eliminating fixed hierarchies will undercut many
class hostilities and related impediments to efficient expression of
leadership that isn't based on coercive rights.

In answer to question four—is there sufficient motivation? —the desire
to earn a living, do a good job, and, when necessary, peer pressure

and the desire to keep one's job, more than adequately ensure that
people work hard. Of course there are disagreements and personality
clashes. But surely these are more manageable once demeaning
hierarchy has been eliminated. Transfers to other workplaces are likely
made to resolve intractable personality clashes, which could certainly
still arise. Arguments about who is doing how much work, how well,
how hard, and with what degree of sympathy for coworkers, are
resolved by participants, or, when necessary, through council
oversight. Sometimes people are fired, but not at the whim of a "boss"
or in such a way as to threaten one's income. In essence, the workday
at Northstart is self-managed in the context of assessing the
collective's well-being and its desires to publish desired books in an
effective, efficient fashion. The only inflexible rules are those
precluding methods that obstruct participation or deny equitable
access of all workers to equal opportunities for fulfillment and
influence.

We should mention again, however, that since the Northstart work
complex has more creative and fewer distasteful qualities than the
average workplace in the economy, Northstart workers have to put in
some of their work time elsewhere. Some Northstart employees work
in community clean-up squads. Others do rote tasks at a neighboring
plant that produces computer equipment. In any event, everyone does
his or her share of outside work to balance the relative advantage of
working at Northstart.

Would a sensible person rather work at a capitalist or a parti- cipatory
publishing house? Since we have not yet described the daily texture of
allocation, we only partially understand how parecon decisions are
made. But more detailed allocation-related issues aside, the quality of
parecon's work should be obviously superior:

1 The hassles of hierarchies disappear.

2 The pleasures of publishing for human well-being rather than
capitalist profits are significant.

3 Opportunities for personal development and camaraderie with co¬
workers abound.

4 No one does solely debilitating, subordinate work.

Though work at Northstart has drudgery, it is nonetheless a generally
enriching means to personal development and integrity within a
supportive community of co-workers.

Workplace Planning: Personal Texture

With Northstart planning we emphasized overall logic and left out
details of personal discussions and the qualitative dimensions of plan
formation. Suppose we now consider the hypothetical John Henry Steel
Plant. Here we focus on a few examples of interchanges rather than on
overall dynamics. This provides a different slant on the planning
process, including the types of disagreements likely to occur. It will
also help explain how workers adjust workloads and pay attention to
the qualitative as well as quantitative dimensions of what they produce
and use.

An Overview of John Henry Planning

As at Northstart, planning at John Henry goes through a sequence of
iterations involving the evaluation of demands from other units along
with attendant proposals, revisions, negotiations, and decisions. The
John Henry Steel plant, as conceived here, employs thousands of
workers, has a large amount of heavy specialized machinery, and has
a production process that involves an average work complex well
below the social average. Proposals for improving work life at John
Henry are therefore high on the agenda, and John Henry workers spend
more than the average number of hours doing work outside John Henry
at more rewarding labors.

Because the seven planning iterations are formally the same at John
Henry as at Northstart, we will not summarize them again. Moreover,
since each plant embellishes its own planning procedures with
whatever rules, schedules, and divisions of responsibility it chooses,
John Henry has many differences from Northstart, but these
idiosyncrasies are not our concern here either. Instead we want to see
some of the disagreements that arise in planning.

Choosing Between Alternative Production Schemes

In the early stages of planning John Henry workers must choose from
among proposals to change organization/technology. Let us look in on
this process once it has come down to a choice between three
alternatives.

Proposal one's main features involve acquiring some new furnace
equipment and rearranging a few aspects of associated processes. Its
supporters claim it will allow a two percent reduction in labor hours per
ton of steel output, no significant change in material inputs, and only a
modest improvement in the average work complex for the plant which
is achieved by removing one dangerous and one rote task from one
part of the production process.

Proposal two's advocates also claim a small reduction in labor needs
and modest improvement in work complex for a similar investment.
Proposal two was submitted by the record-keeping department and
affects only work they do. The record-keeping team estimates a
slightly greater improvement in the average work complex than
proposal one offers.

Proposal three evolved through discussions among a number of
divisions and involves more elaborate changes including purchases of
major equipment, a substantial redefinition of tasks, and a major
rescheduling of plant procedures. It requires a greater investment and
alteration of social relations than either proposal one or two. Its
advocates claim it will only marginally increase material inputs needed
per ton of steel produced, though it will increase labor needed per ton
by 3 percent. The major advantage of proposal three is that it would
significantly improve the average work complex at John Henry, offering
improved work conditions and increased opportunity for
communication among workers.

Earlier in the planning process a number of other proposals were
rejected as inferior, though some of their better features were
incorporated into these three proposals. At this point there is a new
plant-wide debate about the three alternatives. Since both proposals
one and two reduce the social cost of inputs without sacrificing output
and with only minor investments, there is little doubt other councils in
the industry and economy will approve them. On the other hand, the
third proposal requires substantial investment and also increases
inputs per output, so while the improvement in quality of work life
might warrant the change, this would have to be carefully explained to
other units in the economy since the usual quantitative indicators
would not immediately, in and of themselves, indicate grounds for
approval.

Advocates of all three proposals have personal biases coming from
energy they have invested, pride in having made a proposal, and
heartfelt beliefs. This creates three factions with some overlap because
some workers' complexes involve them with more than one of the

departments offering options. For others the grounds for choosing are
preferences and assessment of prospects.

For example, Roger calculates that with either of the first two
proposals his situation is likely to change only slightly—work in the
plant would be somewhat more rewarding, and consequently he would
probably work a bit less outside the plant at a community day care
center. The third proposal, on the other hand, would substantially
improve the quality of his work at John Flenry and lead to a significant
reduction in pleasurable outside duties that used to be required to
balance his overall work experience. In the short run, Roger expects he
would personally benefit considerably, but in the long run, once job
balancing committees and encom- passing councils restructured job
responsibilities, the benefits would be spread around.

Knowing that equity will be achieved, Roger realizes that for him
personally the issue is the same as for society as a whole: which
combination of proposals advances well-being via improving overall
average job complexes the most? Different workers feel more or less
strongly about the prospects, due to being influenced by their own
circumstances and by their different assessments of implications for
others. The decision-making process first involves debate and
discussion leading to agreement to the adoption of particular
material/qualitative descriptions as the best conjectures about the
most likely effects of the three proposals. Although workers cannot
know for sure how changes in relations or technology will affect them
before they try them, they must make estimates or there is no way to
proceed with evaluations and choices. Advocates of each proposal
present and defend their claims about material and human
consequences and, finally, workers vote on the three options.

Suppose option one gets the fewest votes. Plant facilitation workers
then propose two options which are slightly amended versions of
options two and three, and provide spreadsheets that show their
anticipated implications. Discussion and debate begins anew. This
time, however, a council meeting is convened and works toward
resolution in open session. One group of workers proposes a
compromise incorporating what seem to be the most popular elements
into a single package. A vote accepts this as a better starting place for
consideration than either of the facilitation proposals. A period of
amending commences. At some point workers sense diminishing
returns and call for a vote. Indeed, any time the majority votes for
closure, meeting time can be reduced, and of course, individuals who
may reach their personal saturation point with meetings earlier can
absent themselves at any point, returning later to vote. So in this

hypothetical possibility, we get a feeling for how choices might
proceed in one particular workplace.

Though some advocates of earlier proposals will likely feel that a
second-best choice has been made, everyone understands that what
has been decided comes from informed democratic deliberations.
Everyone congratulates the facilitation workers and proposers of the
plan and goes home.

The Intricacies of "Working Overtime"

Lydia lives in a complex whose members are artistically inclined. When
not working at John Henry she works with a drama group that puts on
plays throughout the region. She likes this so much she spends more
time doing it than she is required to in order to balance her John Henry
complex, but since she considers it so much fun, she doesn't even
think to claim it as extra work. If she did, however, society has
presumably decided in its year's consumption plan how much theater
(music, spectator sports, etc.) it wants. Like any other job, people
apply for the jobs in these fields and if more people want jobs than
there are openings, slots are filled based on merit, etc. And if anyone
wants to participate in the activity despite not being chosen, they are
free to do so, but as a hobby without remuneration. Indeed, in parecon,
that is the difference between work and hobbies—the latter are outside
the production plan. However, Lydia wants to get a new computer this
year to help her with design and writing for the coming season. She
could propose this as an investment for her drama group, but she
knows it would not pass, since the need is not pressing there. Lydia
also has the option to "borrow" to make the purchase herself—her
Emma Goldman co-housing mates and others in the neighborhood
would be happy to oblige this request, especially since her plays
provide so much social well being—but Lydia is not overly pleased with
committing herself to pay back a loan by consuming less in the future.
She prefers to work extra hours now to earn the right to the extra
consumption right away. (The astute reader may realize Lydia could
petition that her play writing is socially beneficial and overtime work,
but suppose that that is rejected by the drama industry.)

So Lydia puts in a proposal to the plant facilitation board requesting
sufficient overtime to warrant the extra consumption. She would prefer
to take less time for lunch and come in early or work later each day
rather than working on her days off or evenings since that is when she
works with her drama group. Once John Henry's plan is settled and the
time comes to assign tasks, Lydia's proposal is considered. Confident

no one will protest—Lydia works hard, has made few previous special
requests, and the John Henry workers are the first to enjoy her plays—
facilitation workers assign Lydia the extra time subject to approval by
the council as a whole.

Matthew also requests extra work because, like last year and the year
before, he wants to ask for an above-average consumption bundle.
Matthew wants to do the work an extra half hour a day three times a
week, for as long as needed. Facilitation workers doubt, however, that
others will want to juggle their work schedules to help Matthew still
again, so they ask if he'd be willing to come in Sundays to clean as his
additional work. Matthew balks, and his request goes unincorporated
into the facilitation board proposal of work assignments at John Henry.
Although Matthew later argues his case to the council, its response is
the same as the facilitation workers'. He appeals, to no effect, turns
down the compromise offer to do overtime on Sundays, and decides to
look for a different primary workplace. In the meantime he goes
without the above- average consumption he wanted.

Evaluating and "Bartering"

During the period allowed for preparing the third proposal, Sally
decides the gap is so large between what the steel industry as a whole
has proposed and what consumers have initially demanded that filling
the demand would require a significant increase of steel production
either by placing a considerable burden on current workers, or by
necessitating the transfer of many workers from other areas, with
disruptive effects. Sally, like many other steel workers, decides to
investigate the reasons for the high excess demand before putting in
her third round proposal.

Of course, Sally is quite familiar with how John Henry steel is used. She
has a good overview of the whole economy and the role steel plays.

She thought the facilitation board's estimate of a three percent drop in
demand for this year—given the long-term switch from steel to new
high-tensile alloys—was reasonable. Therefore, when she first heard it,
Sally believed the high demand must have been because some town or
city was making a huge request related to a major construction
project, and that town or city would modify its request quickly once
they were made aware of the excess demand for steel. She didn't do
any serious checking on demand, only on supply, to make sure that
John Henry was keeping pace with other plants. But now she becomes
interested in components of demand because they are dramatically
diverging from expectations.

Sally's first step is to set aside a couple of hours one evening to use
one of her work complex's main database terminals to conduct her
inquiries. She begins by checking information regarding current
proposals for steel supply and demand, including a comparison of
current demand proposals with last year's final figures and with the
facilitation boards' most recent predictions. Next, Sally looks at a
breakdown of demand by industry and region to see the roots of the
increase. There could have been a generalized increase in demand for
all products requiring steel, but that would contradict the downward
trend in steel use. Sally finds that the demand jumps were common to
quite a few regions, but not all, and primarily centered in two
industries.

Apparently citizens in Northern regions made unusually high demands
for automobiles, while people generally were making requests for
refrigerators that were at least four percent higher than anticipated.
Because Sally herself had not made any such requests she wonders
what reasons might be at work. With a ten percent increase in
automobile requests in the Northern regions, it seems likely she could
find the explanation with a few well- conceived inquiries. Thus, Sally
next requests a sequence of print-outs including the average commune
and per capita request for automobiles in the relevant regions as well
as the national average, the average for other regions, last year's
national average, the projection for this year, a summary of all
changes in this year's car models, and a similar summary of changes in
refrigerators.

With this information, Sally sees that new cars have innovations that
make them more economical than last year's models for travel in the
snow and she is annoyed that facilitation workers didn't sufficiently
foresee increased demand in heavy-snow regions.

There is no corresponding improvement in refrigerators that would
explain a 4 percent jump in demand. Sally checks the reasons people
gave in a few representative communes and discovers an inordinate
number of people claiming their refrigerators were out of service.
Further research shows that a refrigerator model introduced five years
ago is now showing signs of low durability, leading to the high requests
for replacements. In light of her findings, Sally recalculates her own
proposals for production, scaling things up more than she had initially
intended, but not quite as much as consumers sought. She feels the
refrigerator need is urgent, but some of the people in the cold regions
will simply have to manage without new cars. She also adds her
comments to the qualitative data base.

Sally is eager to see whether facilitation board workers will come to
similar conclusions in their new projections and is gratified when their
explanations are released. They did perceive the same causes of high
demand and elevated their projections for production of steel only a bit
more than Sally had thought warranted.

Differential Productivity in "Competing" Steel Plants

One of the more interesting differences between John Henry's plan and
Northstart's is that John Henry varies dramatically from the
productivity norm for its industry. Publishing companies are all able to
attain comparable productivity and any publisher producing below
average output per unit of input has to have acceptable reasons for
doing so. Some steel plants, however, have technologies neither as
pleasant to work with nor as efficient as others because the yearly fall
in demand for steel makes retooling all existing plants inadvisable: the
new capacity would just lie idle some years down the road. Instead,
selected old plants were only modestly improved in the expectation
that before long the plants would be closed or converted to other uses.
The few plants needed to provide the lower steel demand projected for
the future were retooled extensively, but plants like John Henry were
only minimally updated. Thus, during the year's planning, John Henry's
old technology cannot approach the productivity of the completely
retooled plants, or even the industry average.

The point, of course, is that whereas in an employee-managed market
economy workers at the old plants would suffer lower incomes due to
their plant's lower capabilities, in a participatory economy no such
penalty would arise.

Daily Decision-Making at Jesse Owens Airport

The above discussions of Northstart and John Henry illustrate the main
contours of some ways of conducting participatory planning within
workplaces. Of course, as we have said before, these are not the only
ways. Other plants might have other rules and methods. There is much
room for variation depending on the priorities, interests, inclinations,
and circumstances of any workers' council. In any case, making overall
planning decisions is not the only sort of policy process required for an
economy to work. Every day there are countless choices to make
regarding how workers meet their production commitments. We can

look at the hypothetical Jesse Owens Airport to get an idea of the
dynamics.

The plan for Jesse Owens is premised on a projection of the number of
customers expected to use the airport each week, which in turn affects
staff size, work hours, shift arrangements, and needs for resources and
intermediate goods such as fuel for planes and food for patrons.
Therefore, changes in the number of people flying, or where they fly,
would be the most important reasons for adjustments at Jesse Owens.
In any case, having a plan for the year doesn't mean that each day
won't involve critical decisions about such things as numbers of people
needed at work, numbers of hours of operation, or implementation of
innovations. And of course, this must all be accomplished consistently
with participatory values.

Jesse Owens Airport chooses to divide into units much like those in
contemporary airports—shops in terminals, building maintenance,
airplane maintenance, flight scheduling, passenger meals and other
services, and so on. Each unit has its own council, whose internal
structures may be simple or rather complicated, including separate
councils for sub-units and work teams.

At Jesse Owens, larger councils meet monthly and require only
representative attendance. Meetings focus on policy and personnel
questions. Day-to-day and hour-to-hour decisions are handled by
relevant authorities on the spot. Nothing about participatory planning
precludes having a field captain of the baggage team at "Rosa Parks
Terminal," or a dining maestro in the "Goddard Lounge." Nor does
anything prevent these "authorities" from making decisions about
short-term scheduling or calls to bring in extra employees. What is
precluded is only that such "executive functions" embody levels of
authority disruptive of solidarity, variety, or collective self¬
management. Therefore, these positions would be held only as parts of
balanced job complexes and in some cases even only temporarily, to
keep some people from consistently making decisions for others to
carry out.

Decisions about assignments and hiring new workers or releasing
workers to other enterprises are made by personnel committees and
teams. These staff members also have other assignments to balance
the quality of their work complexes.

Disputes arise about irresponsibility, lack of effort, bossiness, etc. How
might these be resolved? Under capitalism, at best, such disputes are
handled by grievance committees with union reps committed to
defending employees no matter what the facts may be, while

management tries to fire strong union members, intimidate
employees, and sanction workers. In coordinator economies, workers
have usually been less effectively represented by unions, although
firing even those who do practically nothing has been almost
impossible due to the rhetoric of the movements who brought these
systems into existence and the absolute prioritization of full
employment. In participatory economies, in contrast, disputes between
workers carrying out administrative and implementation tasks will be
settled in committees of other workers who all carry out both
administrative and implementation tasks themselves in their balanced
job complexes. Different plants might have different procedures for
hearing complaints and bringing grievances. There are many ways to
handle such matters, and choices would be contoured to the particular
dynamics of specific and workforces.

Hiring and Firing

But consider just one issue that would naturally arise at all workplaces
on a regular basis—the hiring and firing of employees. There are many
reasons for hiring and firing, including an increase or decrease in
demand for a company's product, incorrigible malfeasance, or the
need to replace someone who has moved on to a new job. There would
therefore be self-chosen movement of people among workplaces in a
parecon, just as in any non-totalitarian economy. How could this be
handled?

Each workplace, we hypothesize, envisioning how they might choose to
fulfill guiding participatory economic principles, has a personnel
committee. Some committee members would mediate interpersonal
disputes and problems with employees' personal work habits, others
would process requests to change assignments within the workplace,
and still others would process requests for transfers and hire new
personnel. Moreover, the last function would be greatly facilitated by
industry and regional Employment Facilitation Boards, or EFBs. Each
workplace would communicate its expected needs for new employees
and/or notice of employees wanting to leave to industry and regional
EFBs, which would in turn regularly provide information back to
personnel committees in workplaces. All this information would also be
publicly available.

Say that Jackie wanted to leave her job at Jesse Owens Airport in
Boston to move south. She would report this to her personnel
committee so they would know she was thinking of leaving, and
contact the appropriate EFB to find out about available jobs. Although

she could go any time she liked, if she wanted to remain in airport
work, then for the benefit of her workmates she might agree to leave
in tandem with some other individual's transfer to Boston. Or, more
flexibly, she might agree to leave whenever there was an opening she
wanted to fill at a southern airport and there was a potential employee
available to fill her role at Jesse Owens, whether a new worker just out
of school, or a transfer from the South, or someone else.

Alternatively, if fewer employees are needed at Jesse Owens, the
personnel committee would work with EFBs to come up with a list of
new places they could confidently apply and organize a process
whereby people could decide if they wanted to volunteer to transfer.

Involuntary transfers would sometimes be necessary in a parecon—as
in all economies—but they would occur far less often than in other
economic systems. A parecon would not have the type of "boom and
bust” cycles that plague market economies. The need to shift
employees would always arise from the need to move people from one
industry or workplace to another due to shifting preferences for
outputs, rather than from a need to lay off workers in general. Any
general decrease in total work required would be shared by all workers
in the economy as a welcomed reduction in work hours or work
intensity—not confined to a few as dreaded unemployment.

Also, balanced job complexes and remuneration for effort means that
much of the pain we associate with transfers would be absent in
participatory economies. There is every reason to expect more people
to be willing to transfer voluntarily since job quality and pay will not
suffer in moving. Also, we believe the EFBs would be much more
efficient in matching institutions and people than any system found in
present economies. While Labor Market Boards in Sweden have been
head and shoulders above employment agencies and retraining
programs in the US, the EFBs would have much better information
available more quickly, and in particular with much longer advance
notice of changes in technologies and long-term investment intentions.
In any case, involuntary transfers would never be accompanied by a
loss of consumption rights or the extreme social stigma and loss of
dignity so common today to unemployment. And finally, if it is socially
agreed that having to switch jobs is a sacrifice, it could certainly be
remunerated as such.

It is a different matter, however, if someone is fired because he or she
is unwilling to work or is so antisocial that nobody wants him or her
around disrupting work relations. It will not do to dodge the issue
pretending these problems will never arise in participatory economies.
There will always be disharmony and recalcitrance of diverse types.

And there will have to be provisions for dealing with cases that are
curable, and others that are not. All we can say is that many of the
causes of such behavior will no longer exist in participatory economies,
and that we would expect the ways chosen for dealing with the fewer
remaining problems of this sort to be far more humane than in present
economies.

12

Consuming

Think of the whole country as a big household, and the whole nation as a big family
[....] What do we see? Half-fed, badly clothed, abominably housed children [...] and
the money that should go to feed and clothe and house them being spent on bottles
of scent, pearl necklaces, pet dogs, racing motor cars, January strawberries that taste
like corks [...] the nation that spends money on champagne before it has provided
enough milk for its babies, or gives dainty meals to Sealyham terriers and Alsatian
wolf-hounds whilst the infant mortality rate shows that its children are dying by
thousands from insufficient nourishment, is a badly managed, silly, vain, stupid,

ignorant nation.
— George Bernard Shaw

Consumption has two facets—what we do individually and what we do
collectively. Here we consider first collective and then personal
consumption, trying to discern features of each in a parecon.

Collective Consumption

The Capitalist Case

How are millions of citizens of a capitalist county organized so that
their different desires emerge as demands for "public” goods? Who
decides? Who pays? We need to consider purchases of roads, schools,
hospitals, parks, fire equipment, and social services. Yet, even this
does not exhaust the list of "things" consumed collectively by
members of the capitalist county we will call Jefferson Park.

For example, there is the way the county looks, largely deter- mined by
its architecture. And there is the county's ecological health,
determined by pollution standards and the availability of ecologically
sound goods. Thus far more goods than are usually deemed "public”
comprise the county's collective consumption.

In capitalist Jefferson Park, it is officially the county government that
decides on the mix of public goods and the taxes that will be levied to
pay for them. But in Jefferson Park the government inevitably caters to
lobbies that wield power in proportion to their wealth. Traffic lights are
erected and streets re-paved in upper- and middle-class areas. Toxic
wastes are dumped near the ghetto. County government also
determines the location of public and private buildings by setting
zoning ordinances in response to pressure with wealth being more
important than numbers of voters.

Consider hospitals: How many are in Capitalist Jefferson Park county?
How are they designed? What ailments do they treat? The number of
private hospitals established depends on whether they attract
investors, which in turn depends on the county government's efforts to
provide services. The number of public hospitals established depends
on the county budget, which is in turn affected by the tax base held
hostage by business. In a system where those who pay the piper call
the tune, the design of any hospital and disposition of its resources will
naturally reflect the tastes of its financiers. If a hospital's clientele is
wealthy, then providing attractive rooms, fine care, and a maximum of
amenities justifies high fees and the hospital becomes private. If the
hospital's clientele is poor, much of its revenue must come from the
county budget and budget crises will necessitate reducing costs and
increasing "throughput" per day by rushing patients through
treatment, often prematurely. Amenities will not translate into profits.
The disposition of resources thus is geared to speed and thrift and
avoiding embarrassment or lawsuits—not to comfort or care.

The influence of money over county policy gives rise to a "sensible"
passivity among most of the population in capitalist Jefferson Park.

With less time free from the daily struggle for survival, and county
officials already beholden to wealthy donors, county politics reduce the
majority of the county's people to ignorance and apathy regarding
important decisions. This apathy is interrupted by occasional outbursts
of rage at corruption, incompetence, or a tax burden grossly out of
proportion to benefits received. The result is that most of the populace
has little say in deciding whether a hospital should be constructed,
what its design should be, and whom it should serve. The same holds
for construction and repair of roads, fire stations, airports, the location
of factories, the location and quality of schools, libraries, recreation
centers, and health clinics, and the mixture and incidence of taxes to
pay for all these. Most capitalist Jefferson Park consumers never know
what issues are at stake, what alternatives they have, that they could
do something other than leave decisions to government bureaucrats.

Conservatives insist that the solution lies in taking decisions out of the
hands of government—whose decisions are often corrupt and biased
and "necessarily” coercive—and leaving them to the market, where
"all choices are voluntary and freedom is preserved." But decisions
about parks, roads, schools, and fire protection affect large numbers of
people. Even mainstream economists have long recognized there is
nothing efficient or democratic about leaving such decisions to market
allocation. Such decisions should be collectively made, preferably in a
way that properly values available options and guarantees everyone
an equal and effective opportunity to participate without wasting their
valuable time.

The Participatory Case

In hypothetical participatory Martin Luther King County (MLK), all
citizens belong to their neighborhood council, their ward council, and
the MLK council, as well as to still larger and more encom- passing
councils. With this structure, not all ward or county council members
need to attend all ward or county council meetings. For really
important issues, it is agreed, in our hypothetical case, that decisions
are made by a referendum of all members with whatever voting
system is warranted. Other times, it may be that only representatives
sent by neighborhood councils to ward councils or by ward councils to
county councils deliberate and vote. Meetings are always open and
televised, with very prominent notice before referenda occur. In
addition, one county workplace is the Collective Consumption
Facilitation Board (CCFB), which is empowered to facilitate decision¬
making regarding county collective consumption. The CCFB is
governed by the same participatory rules as any other workplace. Each
neighborhood and ward council has its own smaller CCFB to facilitate
their collective consumption decisions, and the same holds for cities,
states, and regions.

So we see decisions being made at the various levels of individual,
neighborhood, ward, and county. To fully understand collective
consumption requires relating it to the planning of all economic
decisions. Here, however, as a first step, we emphasize relevant local
institutions and the logic of some of their procedures.

MLK county determines short- and long-term collective consumption
priorities and plans. It chooses between projects like new athletic
complexes, cultural centers, hospitals, schools, and bus systems, or no
new efforts at all. The county council makes decisions by referendum
of the whole council, using methods they agree on for a variety of

proposed projects. Competing collective consumption alternatives
arise out of communications between the CCFB and county council
representatives or just messages from neighborhood councils. Again,
we are not trying to provide a detailed blueprint that must be adhered
to by all parecons, not only because most of the details of a new
economy will only be learned via the experience of creating it, but also
because there will be no such detailed universal blueprint. Different
parecons in different countries and different workers' or consumers'
councils in a given parecon can in many instances arrive at different
approaches even for doing similar things, depending on their histories,
situations, and preferences. It is only the broad values and the
overarching structures that are universal from parecon to parecon and
within one parecon from unit to unit. At any rate, in this hypothetical
descriptive account of a particular parecon's operations, the CCFB has
data about the prior years' plans as well as projects that were not
approved last year. A first set of options includes a continuation of
plans in progress, a listing of other plans previously desired but
delayed, and a list of proposals for possible new collective
consumption projects received by the CCFB throughout the year from
neighborhood councils, individuals, and workplaces.

Participatory planning procedures then refine these many possibilities
into more precise options or pass them up to more encompassing
councils for choices to be made by appropriate voting procedures.
Although additional participation by citizens requires that more of their
time go to managing collective consumption than under capitalism, it
is less time than they previously spent compensating for the ills
induced by profit-motivated decisions.

In the same way that the county determines its collective consumption
preferences, ward and neighborhood councils consider such issues as
further improving local day care facilities, scheduling food delivery, re¬
seeding neighborhood parks, changing pool schedules, building a new
movie complex, and enlarging the local library. Neighborhood CCFBs
facilitate such decisions by listing options and enumerating their likely
effects. Instead of the whole county participating, it is agreed that
insofar as these decisions have an overwhelmingly local impact, only
members of the affected ward or neighborhood will cast ballots,
though ultimately each neighborhood's plan is summed into the plan
for the whole county, and then summed into the plan for the whole
society, and processed through participatory planning, with the
possibility of other constituencies weighing in as they are affected.

The difference between capitalist Jefferson Park County and
participatory Martin Luther King County should be clear. In the
capitalist case, collective consumption succumbs to the will of

government bureaucracy and powerful private interests. The definition
of options and their refinement into final choices rests with
"professionals" subject to pressure from private lobbies. Most citizens
are estranged from decisions, since the process and outcomes
accommodate only the wills of powerful elites motivated by a desire to
maximize their own profits and status.

In Martin Luther King County, individuals, neighborhoods, and interest
groups submit ideas for collective consumption projects. Workers
serving on the CCFB refine these options into coherent possibilities
whose effects can be compared. Their workplaces are structured so
that CCFB workers have no economic vested interests channeling their
work, and in any event, final collective consumption is debated by
everyone who wishes to participate and final decisions are made by
democratic procedures sensitive to the different effects decisions may
have on different constituencies. But what about individual
consumption in capitalism and in a parecon?

Individual Consumption

The Capitalist Case

In capitalism, shopping is the quintessential activity. "Live to shop."
"Shop 'til you drop." But in capitalism when we consume we know little
about what others must do to produce what we consume. Even if we
wanted to do so, we have limited ability to temper our requests out of
concern for producers. We can only respect the limits of what is
available, our personal budget, and our own desires.

But what determines availability in capitalism? The aims and motives
of owners, a fact which significantly restricts consumer options. And
what tells us what the market offers? Packaging, advertising, and word
of mouth, none of which is entirely trust- worthy. And what determines
our budget? Wages, income, and other forms of grossly unequal
wealth. And what additional pressures influence us to buy more of this
or that? The norms of gender, class, and culturally circumscribed
behavior, the requirements of work, the pressures of seeking status
through consumption, and, in the absence of viable social alternatives,
the need to find almost all enjoyment from private commodities.

The absurdity of consumption under capitalism is difficult for those of
us living inside the system to recognize. In The Dispossessed (Avon,
1974), science-fiction writer Ursula LeGuin has a character named
Shevek who comes to earth from a moon habitat devoid of

consumerism to visit a capitalist shopping mall. His reaction is as
follows:

Saemtenevia Prospect was two miles long, and it was a solid mass of things to buy,
things for sale. Coats, dresses, gowns, robes, trousers, breeches, shirts, umbrellas,
clothes to wear while sleeping, while swimming, while playing games, while at an
afternoon party, while at an evening party, while at a party in the country, while
traveling, while at the theater, while riding horses, gardening, receiving guests,
boating, dining, hunting— all different, all in hundreds of different cuts, styles, colors,
textures, materials. Perfumes, clocks, lamps, statues, cosmetics, candles, pictures,
cameras, hassocks, jewels, carpets: toothpicks, calendars, a baby’s teething rattle of
platinum with a handle of rock crystal, an electrical machine to sharpen pencils, a
wristwatch with diamond numerals, figurines and souvenirs and kickshaws and
mementos and gewgaws and bric-a-brac, everything either useless to begin with or
ornamented so as to disguise its use; acres of luxuries, acres of excrement. ... But to
Shevek the strangest thing about the nightmare street was that none of the millions
of things for sale were made there. They were only sold there. Where were the
workmen, the miners, the weavers, the chemists, the carvers, the dyers, the
designers, the machinists ...? Out of sight, somewhere else. Behind walls. All the
people in all the shops were either buyers or sellers. They had no relation to the
things but that of possessions. How was he to know what a goods' production
entailed? How could they expect him to decide if he wanted something? The whole
experience was totally bewildering.

The Participatory Case

Citizens in MLK county have a wide variety of living arrangements.
Some live alone, some in couples, some with a partner and children,
some in communes. Some live with a few friends and others live in "co-
housing communities" where many dwellings band together as a larger
whole to collectively share various resources and responsibilities. All
these different kinds of living units and many others, no doubt, are part
of neighborhood consumption councils.

As one of the more collective forms of living group, what might a co-
housing community be like? The hypothetical Emma Goldman
community (EG) might have 67 members, of whom 35 range from a
few months to 17 years old. Of the 32 "adults," 24 are "coupled" and
eight "uncoupled." Eight of the children have biological parents living
as a couple in the complex. Another 12 have both biological parents
living in the complex but not "coupled." Nine of the remaining 15
children have one biological parent with them and the other either
deceased or living elsewhere. Four children have biological parents
who live elsewhere, but none in the complex.

EG has households of various types. A quarter of the couples are gay
and many people live in extended families. The complex has a

children's section and an adult section so that children and adults can
enjoy privacy from one another. The community's households all have
pleasant individual living quarters and adequate kitchen facilities, but
EG also has a collective dining hall, collective sports equipment, a
large library and entertainment center, a collective laundry room, and
a well-outfitted computer center.

The community meets regularly to adopt and update consumption
plans, and to coordinate schedules for day care, shopping, and other
tasks where people can benefit from economies of scale. Clearly, the
advantages of the co-housing community lie in this collectivizing
feature—the sharing of tasks and responsibilities, the ready availability
of assistance, baby sitters, friends, and project partners, and the
benefits of not wasting personal consumption allowances on goods
that can be enjoyed much more cheaply, efficiently, and ecologically
when shared collectively.

So what is the situation of the individual consumer? First, he or she
considers individual consumption in light of already determined
collective plans for the county, neighborhood, and co-housing
community, since these collective decisions may greatly affect needs
for private consumption. Of course, carefully planned collective
consumption does not relegate private consumption to the ashcan of
history. There is plenty left to decide personally, and we must ask how
this differs from consumption under capitalism.

Lydia belongs to the EG community. She likes it because its
membership (which changes as some people leave and others are
accepted by a vote of the whole complex) is in tune with her own
tastes. As with most communities, there is no smoking. People of
diverse ages, sexual preferences, and cultural backgrounds are
included. Most of the members of EG are into theatre, film, music, or
writing. Their collective consumption decisions are made accordingly,
so EG has less athletic equipment, science labs, and crafts rooms than
co-housing communities which feature those pursuits, but enjoys a
very nice theatre, above-average sound systems, photo labs, and well-
equipped music rooms.

Lydia determines her personal consumption needs by taking collective
requests into account. She also considers the implications of her
requests for workers with the aid of information generated by parecon
allocation procedures. Beyond being able to consciously affect and
take account of collective decisions, Lydia is also privy to the general
character of her community mates' anonymous private consumption
choices because she is allowed to question those that seem dangerous
or otherwise antisocial at planning sessions whenever it is evident that

someone has proposed to consume more than a fair allotment or
whenever it is clear that someone's consumption request is of such a
character that Lydia (or anyone else) feels that it is potentially harmful
either to the consumer or to the co-housing community as a whole. Of
course, the same holds for Lydia's requests, which are also put into the
public hopper, though no one knows who in particular is requesting
what because in Lydia's council it is agreed that unless absolutely
necessary, consumption requests are anonymous.

The fact that Lydia has to propose her consumption yearly doesn't
mean she cannot change her requests when the need arises.
Participatory consumption welcomes regular updates of plans. Yet
Lydia must get her food, furniture, clothes, and other goods
somewhere. Primarily, she will get it at local outlets in her
neighborhood although she can also make purchases at outlets
elsewhere should she want to. She has a kind of credit card, that
incorporates her plan, budget, and choices, and allows regular
updating in light of changes in her preferences and patterns.

Consumption Planning

Assume that all higher-level consumer federations have already
arrived at collective consumption plan. Let's follow the consumer
calculations of two residents of MLK county, Arundhati and Tariq.

Determining County-Level Collective Consumption

Consumption planning begins with collective consumption projects,
starting at the highest level and working down, and culminating in a
vote on an entire collective consumption package. We look in on this
process at the point where individuals present requests for county-
level collective and individual consumption.

Of course, all of last year's data is available and MLK residents pay
particular attention to records of their requests and final plans from
last year, to their county's status as a borrower or creditor, to IFB
projections for this year's average consumption, and to the county
consumption facilitation board's summary of collective consumption
projects members have suggested.

The CCFB proposes various options. But consumers are not hit
suddenly with a menu of collective consumption options they know
nothing about, have not discussed, and have no opportunity to alter.
On the contrary, consumers are periodically informed regarding the

formation of these proposals and can intervene at any time with
comments, suggestions, and alternate proposals of their own.

Afer having spent time evaluating the various CCFB proposals, each
living unit discusses them, suggests alterations, and registers
preferences. Individuals weigh the benefits of proposed collective
consumption requests against their estimated social costs and
estimates of county consumption within their region. People also
consider the implications for individual consumption of collective
consumption for which they will be "charged” their fair share.

For example, Arundhati who lives with her husband and their three
children as members of EG co-housing community, considers how
options vary in terms of their social costs and benefits. She considers
how much a new county cultural center would reduce the need for
personal cultural products, what strains it would place on workers, and
how much it would diminish each county resident's personal
consumption budget.

Of course a particularly large county collective consumption request
need not reduce individual consumption budgets drastically in the
same period. The "debt to society" can be spread over time through
county borrowing and saving. This is not only reasonable but essential
if any large-scale collective consumption is to occur. In any event,
Arundhati and others deal with these issues with the aid of the
information made available by the CFBs and computers that quickly
and conveniently provide information on the implications for average
consumption bundles and make comparisons with other units and past
plans. Consumers manipulate software that helps them evaluate the
implications of alternative collective con- sumption choices. For
example, Arundhati can see data describing how a new community
athletics center would reduce what is available for individual
consumption but permit greater access to exercise equipment,
basketball and volleyball courts, pools, etc., for herself, her husband,
and her children.

After receiving feedback from all the households that make up the
county council, the CCFB modifies its list of proposed collective
consumption projects and resubmits it for households to consider. After
discussion, each household ranks the revised proposals, including
explanations for its preferences. At this point, the CCFB proposes four
possible collective consumption agendas, explaining the implications of
each for overall plan possibilities.

Flouseholds, co-housing communities, and other living units then vote
on the four collective consumption bundles, dropping the least popular

with each vote until one remains. This voting is "live"— living units and
representatives are linked by computer and TV hook-ups so that votes
can be inclusive and tabulated immediately. In this example, as in
most other voting procedures, representative structures facilitate
making amendments to incorporate as many viewpoints as possible.
Then all citizens can vote on the amendments because of the speed
with which votes can be tallied.

The above is but one possibility. But there is no one right way to
undertake collective consumption. Different counties would employ
different procedures. Guidelines for transparency, participation, self¬
management, and proper valuation, are the universals.

Once MLK and other counties have settled on their collective
consumption requests, these can be massaged in light of one another
and summed into state and national collective consumption requests.
Rather then pursue that in detail, next we describe how neighborhood
and personal consumption requests can be developed.

Determining Personal Consumption Proposals

Since neighborhood collective consumption mirrors the logic of county
collective consumption, we move to personal consumption requests.

To develop a personal consumption plan, Tariq consults the IFB's
estimates of indicative prices, assessments for collective consumption
for members of his neighborhood, and average personal consumption
estimates, and settles on a "borrower/loaner" status. To simplify,
similar products of comparable quality are grouped together so Tariq
needs to express preferences for socks, but not for colors or type of
socks; for soda, books, and bicycles, but not for flavors, titles, or styles
of each. Statistical studies enable facilitation boards to break down
total requests for generic types of goods by the percent of people who
will want different types of records, soda, or bicycles. There are no
competing companies producing products, only "product industries"
creating diverse styles and qualities of goods for different purposes, all
with the intention that everyone get what is best meets their needs.

Tariq has under-consumed relative to his allowance in the past two
years and has decided to even up the balance a bit this year. On the
other hand, his county, MLK, has requested a higher than average
county collective consumption bundle, some of which is being
borrowed, but some of which will be "paid for" now by reducing the
consumption of MLK residents this year. Tariq knows there is no point
being too modest in his initial proposal—the iteration process will

compel him to lower his final request as necessary. But he doesn't
want to make requests that are outrageously immodest, either, since
that would only lengthen the bargaining process and do nothing to
increase his final consumption.

Tariq knows his selections have social implications. It is not that his
choice of a particular kind of food implies that everyone else should
get the same amount of that product. People have different needs and
tastes. But the total of Tariq's consumption calculated according to the
IFB-generated indicative prices and adjusted for MLK's above-average
collective consumption request and his individual status as a borrower
against past savings implicitly expresses what he thinks is a
reasonable average consumption bundle for all members of society. It
would be pointless for Tariq to suggest a value too far in excess of
what the IFB has anticipated, unless he thinks the IFB has made a
gross underestimation.

So Tariq takes his turn at a computer terminal to try out various
combinations of different goods, checking on the total value of his
proposed bundle. The computer contains anticipated averages,
indicative prices, and so on, as well as qualitative descriptions of the
products (which he can also see at outlets) and of the work that goes
into their creation. The information helps Tariq assess whether rote or
dangerous methods are employed to produce the goods he wants.

Tariq knows that if he requests a lot of goods that require work at
below-average job complexes, he is implicitly changing the societal
average work complex and his own labor requirements. Self- interest
and collective solidarity argue against such a request unless he thinks
the benefits of consuming the good in question are worth the extra
drudgery. In any event, getting detailed information about production
relations only requires a few minutes.

As Tariq completes his first proposal, so do other consumers, and all
are submitted to the societal planning data bank where they are
collected and processed by IFBs. New summaries are presented
including updated projections of anticipated indicative prices, average
consumption, and the current status of each good, all to be discussed
next chapter.

13

Allocating

Freedom is not merely the opportunity to do as one pleases; neither is it merely the
opportunity to choose between set alternatives. Freedom is, first of all, the chance to
formulate the available choices, to argue over them—and then, the opportunity to

choose.
—C.Wright Mills

In the two prior chapters we discussed the institutions of participatory
planning and the direct situations of hypothetical workers and
consumers in hypothetical workplaces and communities. What remains
is to discuss the more detailed dynamics of participatory planning,
some of its content and its character. For one thing, up to now we have
assumed long-run projects were decided before annual planning, and
that at the outset of the yearly planning process each economic actor
had access to important information. How is this accomplished? Other
topics we address in this chapter are the handling of information, the
tasks and procedures of the facilitation boards, and a description of the
personal experience associated with planning.

Long-Term Plans

Should society make a qualitative change in coal mining that
drastically improves health and safety? Should it update existing steel
plants, build a new high-speed rail line, or transform agriculture to
conform to ecological norms? All may be desirable, but presumably,
given limited resources, not all can be done at the same time. That is
the meaning of long-term investment choice and the problem it poses.
Which projects are worth doing and which are not? In what order
should they be done? And how fast should we tackle the list—which is
to say, how much present consumption are we willing to sacrifice for
future benefit?

Long- and short-term investment projects differ in regard to how many
years' resources must be committed for the project to reach fruition.
Large- and small-scale investment projects differ also regarding the
magnitude of commitments and the breadth of efforts required. One
approach to long-term planning would be to handle this issue before
yearly planning begins. At this time, all previously agreed to long-term
projects could be reviewed and updated so that the commitment of
resources necessary for this year could become part of subsequent
planning calculations. After national projects are settled, large regions
could settle on their new long-term projects, and so on, down to the
smallest units. In each case, alternate proposals could be aired,
preferences expressed, implications assessed, new alternatives

broached, options eliminated and improved, and final decisions made
after due deliberation, all by participatory procedures similar to those
described in our earlier discussion of county-wide planning.

A procedure that could shorten the process would be to first decide the
proportion of economic resources we want to commit to investment.
Debate about options could then be made knowing roughly what
productive resources were available. Formulation, presentation, and
modification of long-term investment options could be made and
updated by the investment facilitation boards, who could base their
proposals on submissions from units, also as outlined in the earlier
county example.

It is important to recognize the advantages of collective, participatory
investment planning. In capitalist or market coordinator economies,
each unit assesses potential investments according to norms imposed
by the market and class system. In the workplace, the decision to
switch from one technology to another is made by assessing likely
profit/loss and capital/labor or coordinator/labor bargaining
implications. But this is most definitely not the same as deciding on the
basis of social cost and social benefit. Only the benefit of owners,
coordinators, and stockholders is taken into account. Moreover,
investment decisions in market economies are not even planned in
coordination with one another. For example, the steel plant that
decides not to introduce new technology because it appears
unprofitable might have decided differently were they better able to
foresee how innovations in other industries would dramatically alter
the cost of inputs or the demand for steel. Or, since there is a premium
on corporate secrecy under capitalism, two firms might make a
decision to invest in a new plant when society only needs the output of
one.

In participatory planning, on the other hand, coordinated planning in
light of social costs and benefits is possible. Each potential investment
stands or falls not because of contemporary relationships alone, but
because of conditions most likely to prevail once all innovations are
available. Whatever criteria society uses to determine whether to
enact particular investments, the participatory planning system will
produce a more accurate assessment of social costs and benefits than
would capitalist or coordinator systems. In addition, in a participatory
system judgments will emphasize the impact of choices on the whole
economy's social relations from the point of view of improving the
quality of life of all workers and consumers, rather than just the
circumstances of elite classes. But what about planning more broadly?

Preparing Data for the First Round

How do iteration facilitation boards estimate overall production and
consumption for the coming year? How do they come up with initial
indicative prices that economic actors can use, and what exactly do
these prices convey? Most important, does proposing likely out- comes
and indicative prices make a lie of our claims that no single agent has
greater say than others? Can facilitation workers exert undue influence
on planning?

Various planning boards begin by reviewing last year's results,
including what inputs generated what outputs in every unit. They know
the final indicative prices and therefore can calculate the value of last
year's production. Moreover, qualitative information is included in
extensive reports from all units and federations and quantitative
information can be accessed using terminals that allow users to see
the inputs required for outputs desired.

Facilitation boards modify last year's data to estimate this year's likely
outcomes based on comprehensive demographic reports regarding
likely changes in population by age and gender, the distribution of
people between city and country, and so on. They know which
investment projects have been completed and how these investments
should affect production potentials. As a result, facilitators can make
educated guesses about changes in production work levels and
indicative prices.

We could provide more detail, but nothing about this type of data
manipulation warrants it. The techniques are well known and
noncontroversial—tedious, but not difficult. Facilitators are merely
taking last year's data and massaging it in light of projections about
investments that have come to fruition, growth of the labor force, and
changes in tastes—the latter being estimated from last year's
interchanges and from polls of particular constituencies.

Facilitators could could follow only prescribed steps for massaging their
data, or they could take some latitude for discretionary and hopefully
creative adjustments. In the former case, facilitators would have no
ability to influence outcomes, but might provide less than the best
possible guesses. In the latter case, there is greater risk of subjective
bias, but also potential for better projections. We will talk more about
this trade-off later when we discuss examples, but here we make four
preliminary observations:

1 It is hard to see any way facilitation board workers (whom we call
facilitators for short) could gain by maliciously biasing data even if they
went about their work without supervision.

2 The choice between using more flexible but also more subjective
techniques and using less flexible but also less creative techniques lies
in the hands of society, not facilitation board workers.

3 There is no reason facilitators' discretionary calculations could not
be checked by anyone who wished to.

4 Facilitators' projections are, in any case, only guidelines to help
economic actors make decisions.

Facilitators themselves don't make any production or consumption
proposals (other than their own), nor do they revise, veto, or approve
any proposals (other than their own). Indeed, facilitation could be
automated, with computers taking last year's data and altering it
according to rules that tell what changes to make. Facilitators would
then only update the program rules as they better understand how
variables affect one another. A less formulaic approach would allow
facilitators to use their experience to refine automatic projections. But
in either case, facilitators make no decisions about what the economy
will do. They only provide information whose formulation is open to
public scrutiny and which economic decision makers are free to ignore
if they mistrust it.

At the outset of planning everyone in society has access to projections
for indicative prices and production and consumption at every level,
including summaries of related assumptions. Individuals use this
information as they please in developing their own plans for the year.

It is therefore hard to see how facilitators could bias outcomes even if
society chose, as we think wise, to give them leeway in their means of
calculation and projection. Of course facilitators, like all other workers
have balanced job complexes and are remunerated only for effort and
sacrifice.

Revising Data in Subsequent Iterations

The tasks of facilitators in subsequent iterations are not particularly
complex. After each economic council and federation submits its first
proposal, facilitators respond by preparing new data for the coming
round. They no longer have to guess based on last year's results. Once
this year's initial proposals are in, IFBs calculate the excess demand or

supply for every good and accordingly adjust the indicative price of
each good up or down. There is room for practical experience and
artistry in making the indicative price adjustments or, if preferred, the
changes could be made according to fixed rules. In either case, not
every price must be adjusted by the same function of its excess
demand or supply. One possibility is that IFB workers with experience
in particular industries or with qualitative information indicating
whether proposals are relatively soft or hard could expedite
convergence by discretionary, informed adjustments. But in any event,
in early rounds, IFBs only summarize qualitative information in data
banks for councils to assess, calculate excess supply and demand,
adjust indicative prices, and revise projections of predicted final
outcomes. The updates of predicted final outcomes are still guesses,
but they are based on more information with each new round of
planning. Reports of excess demand and supply and qualitative
information, however, are a matter of accurate record-keeping.

It is important to note, however, what it is that facilitators would be
"updating" in each round. Before planning commences, IFBs use last
year's results, including information about investment projects, polls
taken during the year, and various demographic data to project
anticipated results for the coming year. Of course actual initial
proposals will not be identical to IFB projections. Once the year's
planning begins, IFBs are revising information based on the most
recent set of proposals submitted. So at the outset of round two,
workers and consumers receive summaries of qualitative information,
new indicative prices, the percentage of excess demand and supply for
every good, and new projections of what average consumption and the
average social benefit to social cost ratio will be for workplaces this
year. Workers and consumers use all this data, as we have discussed,
to modify their requests in subsequent rounds.

During the planning process, facilitation boards at different levels
would regularly communicate with one another and with plant boards
regarding logjams, requests that remain unusually far from expected
averages, reluctance among producers or consumers to compromise,
and especially changing labor requirements that require transfers of
workers.

But facilitators carry out only communicative tasks and never make
decisions for others. Whether they do their job well affects the final
plan, but it is hard to see exactly what motive IFB workers might have
to intentionally bias outcomes or even how they could do it, and it is
certainly possible to have oversight mechanisms.

In later iterations, in addition to adjusting indicative prices and
providing new projections, IFBs could generate alternative feasible
plans for councils to assess and vote on. Indeed this is the case in the
version of participatory planning we have been describing. This
approach would increase the potential for IFBs to influence outcomes
since in late iterations they would be actually formulating options. It is
conceivable, for example, that IFB workers might present five
internally consistent plans but not a possible plan that would actually
be most preferred. But notice that the only reason for having IFBs
present options for a vote is to reduce the number of iterations
required to reach a final plan. It is a matter of practical convenience,
and, should councils be suspicious or unsatisfied with what IFBs
present, the councils and federations can always choose to continue
the iterative process as they had been. In other words, this stage of
the planning process can be postponed until the councils feel that the
time saved warrants any diminution in the quality of results. Moreover,
the idea is that this time-saving part of the procedure would only begin
when the major part of the plan has already been settled on. We are
talking about final moves after the essential outcome is no longer in
doubt. Moreover, councils could always insist that an additional
alternative plan be included with those generated by the IFBs to be
voted on.

Finally, for those who fear that computers could become the new
dictators, the programs are socially evaluated and improved each year.
The computer is acting on data emerging directly from the social
planning process and the preferences expressed by it participants. The
computer uses socially determined data and rules and only carries out
data manipulation and calculations. Moreover, all the scenarios we
have outlined for producers and consumers to make their choices allow
for amendments. Neither consumers nor producers need accept
computer projections.

Society could have IFB workers play a substantial role in refining
options to embody people's preferences, but as with other procedural
choices, there is no one right way. If a society chooses a more
mechanical approach, the need for special oversight to guard against
bias is minimized, but planning might take more time. If IFB workers
are given more leeway, the possibility of human error or bias is
increased and provisions to correct for it become more important
(though significant self-interested bias is hard to imagine given that
facilitation workers benefit only if average job complexes or overall
productivity increase, just like all other workers). But workers and
consumers probably save planning time.

Whatever combination of automatic procedures and human discretion
is adopted for IFB work, unlike in coordinator and capitalist economies,
no aspect of participatory planning is immune to social evaluation. Nor
is any part of the plan finalized without being filtered through the
social barter process where everyone's preferences, evaluations, and
opinions interact. Nor is any individual in a position to systematically
advance personal or group interests against social interests.

The difference between participatory and central planning is that in the
latter, "planners” generate the plan, submit it to those who will carry it
out, get feedback about whether actors can or cannot accomplish what
planners propose for them to do, and then impose a plan. More, they
occupy a different class position and enjoy material and job related
advantages which can be defended and enlarged via plan choices. In
participatory economics "plan workers” only facilitate the process
whereby workers and consumers propose, haggle over, and revise
their own plan, making their own decisions. And if facilitators formulate
any proposals, it is only after all the important decisions have been
made. And facilitators are not in a separate class and do not have
larger incomes or better work conditions to defend or advance against
others' interests.

Working at a Facilitation Board

Working at a facilitation board is not much different than working
anywhere else in the economy. Work is partly conceptual and partly
executionary, and work complexes are balanced by the usual approach
of combining diverse tasks. IFB work may be more desirable and more
empowering than average work complexes in the economy as a whole,
but, if so, greater than average desirability would be compensated for
just as it would in any other workplace— that is, by assignments to less
desirable tasks elsewhere. Greater than average empowerment might
even require rotating people in and out of IFBs after some time period,
in addition to general balancing. Likewise, since working at an IFB is
particularly likely to enhance people's understanding of the
interlocking complexities of economic possibilities, it makes sense to
rotate this work, taking the efficiency implications of experience and
training into account as well. Finally, depending on society's political
structures, a case can be made for working to have IFB staffs be
politically balanced across a spectrum of views, avoiding any biases on
that score.

Qualitative Information

Consumers need to be able to assess the implications of their requests
for workers. Producers need to know why consumers want what they
are working on, not only so they can feel good about their
contributions, but also to decide how hard they want to work.

In addition to quantitative estimates of social costs and benefits,
average incomes, and average benefit/cost ratios, producers and
consumers also need access to qualitative, descriptive information.

Consumer and producer councils can easily write up qualitative
summaries of the work they do and the motives for their consumption
requests. There is no sense overdoing it. There is no point in everyone
saying, "I want milk because it is nourishing.” Producers would provide
a general description of the quality of work involved in their workplace
as well as the desirable and undesirable traits their particular kind of
work tends to generate. Consumers would concentrate on explanations
of unusual requests. But people trying to assess their own choices in
light of other people's qualitative descriptions would want access to
summary information at the level of producer and consumer
federations. So the tasks are:

1 To develop a database system allowing easy access to all this
information.

2 To aggregate the information from lower units into federation-level
summaries.

Can we imagine an effective way to do this? First, individuals would
need "keys" to extract qualitative information. I would go to a console,
and say, "Let me see what goes into producing such and such good,"
or "What is work like in such and such an industry?" or "What is
generating the high consumer demand for refrigerators?" or "Why
does a particular neighborhood want so many more bicycles than the
national average?" We could also ask, "What are the strengths and
weaknesses of such and such a product?"

If we think of all the money spent yearly in the US on advertising —
most of which is misinformation—we can see that the information
system we need may not be such a burden on time and resources after
all. Indeed, it may require significantly less than the total resources
and energies currently allotted to less comprehensive and less truthful,
though more repetitive and wasteful advertising.

Though the information-handling capabilities of such a system would
have to be quite powerful, only the system's scale distinguishes it from
databases already used in offices all over the country. The problem of
storing and accessing descriptive information is nothing new for
programmers, nor is establishing a system for easily updating or
otherwise refining such a database, giving it a simple query system, or
having it provide averages. Moreover, even for a large country, the
system we need would not require much more memory and handling
than systems currently in use by large credit-card companies.

For the most part, IFBs would oversee the qualitative database system.
Summarizing large numbers of individual reports would be demanding,
but like other tasks it could be organized to minimize the likelihood
that IFBs would accidentally much less intentionally bias the
information councils use.

Part IV

Criticism of Parecon

First they ignore you. Then they laugh at you.

Then they fight you. Then you win.

— Mahatma Gandhi

A Judge is a law student who marks his own papers.

—H.L. Mencken

Any economy must allocate goods and resources. Different ways of
accomplishing this will naturally differently affect who does what, who
gets what, and what will be produced, consumed, and invested.

Someone who believes that civilization is best served by pitting people
against one another will opt for allocation via competitive markets.
Someone who thinks complicated decisions are best made by experts
who should be materially rewarded for their expertise will opt for
central planning. In either case, according to most economists, these
are the only feasible allocation procedures. We claim this "impossibility
theorem" is little more than self-serving prejudice and to prove it we
have described how consumers and producers could participate
cooperatively in planning and coordinating their joint endeavors—
without central planning and without markets.

Can people take control over their own lives, care for one another, and
act to enhance their own situations and the situations of their fellow
citizens? Can we have an allocation system that promotes solidarity by
providing information necessary for people to empathize with one
another and by creating a context in which people have not only the
means to consider one another's circumstances but also the incentive
to do so? Can we have an allocation system that promotes variety at
the same time that it creates balanced job complexes and egalitarian
consumption opportunities? Can we have an allocation system that
promotes collective self-management by permitting every worker and
consumer to propose and revise her/his activities? Can we develop an
allocation system that promotes equity rather than class division and
hierarchy?

Other economists deny that all this is possible but advocates of
parecon believe economic activity can be made equitable by ensuring
that desirable and undesirable tasks are shared equally. Fulfilling and
rote work can be mixed to create equitable work complexes.
Consumption bundles can be balanced to ensure equal access to
consumption opportunities. And decision-making authority can be
assigned in proportion to how decisions affect people. Ironically, deep
prejudices based on years of experience in oppressive circumstances
make seeing that all this is possible the most difficult step in achieving
a better economy. Those who hesitate to undertake the tasks of
designing such an economy do so not because the tasks are so
difficult, but because doing so challenges ingrained prejudices and
undermines elite interests.

At any rate, after reading this far, hopefully you agree that
participatory economics is a well-conceived system which could be
implemented and which would enhance equity, diversity, solidarity,
and self-management. The big question, however, is whether we have
overlooked some criticisms regarding these aims or whether parecon
would have deleterious affects on other values people hold dear which
would dramatically offset its virtues.

We assumed many chapters ago that our choice of guiding criteria
would suffice to define a truly inspiring and desirable economy. But
were our guiding values as well chosen, as we claimed so that having
met our goals, other problems will prove minor? For example, what if
parecon is wasteful or doesn't elicit sufficient effort to attain
acceptable levels of productivity or yields damning reductions on
output for other reasons? Or what if it stifles creativity? Or obstructs
merit? Or prevents serendipitous discovery? Or what if it eliminates
privacy, or makes our lives too frenzied by imposing excessive
responsibilities? Or what if it disorients economic attention by

exaggerating the importance of individuals as compared to collectives,
or vice versa? Or what if it sacrifices quality, produces chaos, or is
ecologically unsustainable? Or what if it conflicts with other non¬
economic institutions that we desire, or is too dull to inspire support, or
is impossible to attain?

Any of these problems might outweigh the virtues built into parecon
and cause a potential supporter to decide that while parecon is in
many respects better than capitalism (or market or centrally planned
coordinatorism or bioregionalism), in some respects parecon it is so
much worse that it would have to be rejected. Given that possibility,
we need to address each possible criticism in turn as our focus for the
remainder of this book.

Chapter 14
Efficiency

Do Parecon's Incentives Motivate Optimally?

Thus capitalism drives the employers to do their worst to the employed, and the
employed to do the least for them. And it boasts all the time of the incentive it
provides to both to do their best! You may ask why this does not end in a deadlock.
The answer is it is producing deadlocks twice a day or thereabouts. The reason the
capitalist system has worked so far without jamming for more than a few months at a
time, and then only in places, is that it has not yet succeeded in making a conquest
of human nature so complete that everybody acts on strictly business principles.

— George Bernard Shaw

Efficiency means not wasting assets even as we pursue desirable ends.
In economics, we do not want institutional arrangements that squander
resources, time, labor, talents, or any other assets used to produce
outputs to enhance people's lives. That doesn't mean we want to
exploit all assets mercilessly with no concern for the values we hold
dear. It means we want to meet needs, develop potentials, and foster
preferred values, and also avoid wasting assets.

The dictionary tell us an incentive is "something, such as the fear of
punishment or the expectation of reward, that induces action or

motivates effort." The linkage between not wasting assets and good
incentives is simple. The threat or reward of incentives is precisely
meant to induce behaviors that utilize assets appropriately. Incentives
contribute to the extent outcomes are efficient or not.

Even among those who accept that rewarding effort/sacrifice is morally
superior to other alternatives, many might reasonably wonder if there
is an unfortunate trade-off between rewarding effort to attain equity
and having appropriate incentives to attain efficiency. Is this a trade¬
off that we must navigate by adopting a reasonable system of rewards
that strikes some kind of compromise? Does parecon do that? Do we
need to moderate our desire to reward only effort/sacrifice by
incorporating other incentives that less admirably promote our equity
values but that better motivate laboring activities to avoid wasting
assets?

The question is fair but a little surprising because it turns out that the
case for rewarding only effort/sacrifice on efficiency grounds is, if
anything, more straightforward than the case for rewarding only
effort/sacrifice on grounds of equity or morality.

Differences in productive outcomes arise from differences in talent,
training, job placement, tools, luck, and effort/sacrifice. Once we clarify
that "effort" includes personal sacrifices incurred in training, and
assuming training is undertaken at public rather than private expense,
the only one of these factors influencing performance over which a
person has any individual discretion is his or her own effort. By
definition, a person cannot enlarge his or her innate talent or luck to
get a reward. Rewarding the occupant of a job for the contribution
inherent in the job itself or for the good tools employed in that job also
does not enhance the occupant's performance, so long as productive
jobs and good tools are promoted by the economy more generally.

Thus the only factor we need to reward to enhance individuals'
performance is their effort/sacrifice. This claim certainly turns common
wisdom on its head. As we revisit below, not only is rewarding only
effort/sacrifice consistent with efficiency (assuming appropriate
accompanying methods exist to elicit good allocation of energies and
tools and so on), but rewarding either talent, training incurred at public
expense, job placement, or tools has no positive incentive effects.
These rewards are literally wasted. We cannot change our genetic
endowment because someone offers us a salary incentive for our
output, nor can we change our luck, nor the quality of our workmates,
nor the tools available.

As a practical example, in a very inexact but nonetheless revealing
analogy, suppose we wanted to induce the fastest race we could from

runners in a marathon. Our goal is to get everyone in the race to run
as fast as possible. Should prizes be awarded according to outcome,
rewarding those who go fastest the most, and so on, down to those
who go slowest, or according to effort, perhaps by examining
improvements in personal best times?

Rewarding outcome provides no incentive for poor runners with no
chance of finishing "in the money" and no incentive for a clearly
superior runner to run faster than necessary to finish first. In fact, no
one has any incentive to go much faster than the person they are
barely beating, assuming they cannot beat the person finishing ahead
of them. On the other hand, paying in accord with improvements in
personal best time—that is, paying in accordance with effort as
measured by this index—gives everyone an incentive to run as fast as
they can and in that way produces the fastest overall time. So why, we
might wonder, do so many people believe that seeking equity by
rewarding only effort/sacrifice conflicts with attaining efficiency and
productivity? Three reasons typically arise:

1 People tend to believe that if consumption opportunities are equal
other than for differences in effort expended, people will have no
reason to work up to their full talents or capabilities.

2 If payment is equal for equal effort, there is no incentive for people
to train themselves to be most socially valuable.

3 Effort is difficult to measure accurately, while outcome is not, so
rewarding performance is the practical option.

Responding to reason one, in situations where solidarity or pride in
one's work is insufficient to elicit effort without reward, and where
greater consumption opportunities are the only effective rewards, it
will be inefficient to award equal consumption opportunities to those
exerting unequal effort. That much is correct. But that is not what we
have proposed. We do not rule out correlating consumption
opportunities with effort/sacrifice made at work, but precisely the
opposite. The parecon approach is that everyone should have a right to
roughly equal consumption opportunities because the parecon vision
of production is that all should exert roughly equal effort/sacrifice in
work. To the extent job complexes are balanced so no one is required
to make greater personal work sacrifices than anyone else, effort is
largely equalized and therefore consumption should be largely
equalized as well. But this is not to say that variations cannot occur.
Individual variations of effort and therefore consumption are perfectly
acceptable and anticipated in a participatory economy. People can
choose to work harder or longer, or perhaps to take up some onerous

tasks that have not been allotted but need doing. Alternatively, people
can choose to work less hard or less long to earn less. In short, people
can work less and consume less, or work more and consume more, in
each case in proportion to the effort/sacrifice involved.

But if there is no sky to reach for, you may be asking—if there is no
vast advantage in consumption opportunities to be sought and won—
will people lift their arms to work at all? It is one thing to say it is
morally proper to remunerate only effort/sacrifice. It is another to say
that doing so will elicit enough effort to yield efficient productivity.
Would effort incentives elicit efficient productivity?

In a society that makes every attempt to deprecate the esteem that
derives from anything other than conspicuous consumption, we
shouldn't be surprised that many people feel that great income
differentials are necessary to induce effort. But to assume that only the
accumulation of disproportionate consumption opportunities can
motivate people because under capitalism we have strained to make
this so is not only unwarranted, it is self-deceptive. In the first place,
very few people attain conspicuous consumption in modern capitalist
societies. And those that do not are, for the most part, among the
hardest working in the level of effort/sacrifice expended. Normal
working people currently work hard in order to live at a modest level of
income, not to consume conspicuously. People can therefore obviously
be moved to exert effort and endure sacrifice, even sacrifices greater
than they ought to have to put up with, for reasons other than a desire
for immense personal wealth. Moreover, family members make
sacrifices for one another without the slightest thought of material
gain. Patriots die to defend their country's sovereignty. And there is
good reason to believe that for non-pathological people wealth is
generally coveted overwhelm- ingly as a means of attaining other ends
such as economic security, comfort, useful artifacts for pursuit of
desirable hobbies, social esteem, respect, status, or power. If economic
security is guaranteed, as in a parecon, there will be no need to
accumulate excessively in the present out of fear for the future.

We need not debate the point at length, but wish merely to note that if
accumulating disproportionate consumption opportunities is often a
means of achieving the more fundamental non-material rewards, as we
believe, then there is every reason to believe a powerful system of
incentives need not be based on widely disparate consumption
opportunities. If expertise and excellence are accorded social
recognition directly, there will be no need to employ the intermediary
device of conspicuous consumption to get people to engage in areas of
work where their talents are best displayed. If people participate in
making decisions, as in a parecon, they will be more likely to carry out

their responsibilities without recourse to excessive external motivation.
If the allocation of duties, respon- sibilities, sacrifices, and rewards is
fair, and is seen to be fair, as in a parecon, one's sense of social duty
will be a more powerful incentive than it is today. And if a fair share of
effort/sacrifice is in any event demanded by workmates who must
otherwise pick up the slack, and additional effort/sacrifice are
appreciated by one's companions, recognized by society, and also
awarded commensurate increases in consumption opportunities, why
should anyone doubt that incentives will more than adequately elicit
needed involvement and effort? The fact that there won't be
motivation to undertake excessive production for useless or egotistical
ends would be a gain, not a loss.

But what about reason two? What incentive will people have to train
themselves in the ways they can be most socially valuable if
remuneration is only for effort/sacrifice, not output?

Since Mozart could contribute more by composing than being an
engineer, it would have been inefficient for society in terms of lost
potentials had he studied engineering. And if Salieri would have made
an even worse engineer than composer, the same holds true for him.
Society benefits in accruing more valuable products if people develop
the talents in which they have comparative advantages, and this
means society benefits if its incentive systems facilitate rather than
obstruct this outcome. If Mozart would be inclined to pursue
engineering over composing by preference, it would be desirable that
society provide enough incentives for him to compose concertos rather
than design bridges so that he would happily follow that path. But the
query embodied in issue two is how will a parecon do that if by
composing Mozart would get the same rate of pay for the same
effort/sacrifice as he would for designing bridges? Won't we lose out on
the remarkable compositions we could get from someone with the
innate talents of a Mozart, with society suffering thereby?

First, there is good reason to believe that people generally prefer to
train in areas where they have more talent and inclination rather than
less—unless there is a very powerful incentive to do otherwise. Does
anyone truly think that offered the same pay for using a lathe or a
piano, Mozart would choose the lathe unless someone threatened
convincingly to make his life utterly miserable were he to opt for the
piano? In other words, in most instances, incentives are not even
needed to get people to utilize their greatest talents, we just have to
avoid disincentives, and there are no such disincentives in a
participatory economy. Those who could become wonderful
composers, playwrights, musicians, and actors (or dentists, doctors,
engineers, scientists, or what have you), will not pursue other avenues

of work in which they are less apt to excel in pursuit of greater
material reward because there is no greater material reward
elsewhere. Nor will people in a parecon shun training that requires
greater personal sacrifice since this component of effort will be fully
compensated. Second, for those cases where a little extra benefit of
some sort would be needed to propel a person into his or her most
productive pursuits, a parecon increases direct social recognition of
excellence as compared to other economies. In a participatory
economy, indeed, the best, and in some sense, the only way to earn
social esteem related to one's economic activity is to make notable
contributions to others' well-being through one's efforts. Since working
in accord with one's talents can best do this, there are powerful
incentives to develop innate talents. The only thing a parecon
prohibits is paying ransoms to superstars. Instead, a parecon employs
direct social recognition and thereby avoids violations of our deeply
held values. Will some prospective Mozart or Einstein, knowing their
potential, opt to become an engineer or a violinist rather than a
composer or physicist? It could happen, but it seems unlikely. Would
this happen more frequently than in class-divided economic systems
which squash most people's talents due to imposing on people harsh
poverty and robbing them of dignity and confidence? To ask is to
answer. Not to mention that in capitalism many people with great
potential squander their talents anyway by opting for the huge rewards
they can gain from doing things like becoming a corporate lawyer
whose main function is to help big firms avoid paying taxes—an
outcome that is socially harmful, though of course beneficial to those
with money.

What about reason three, the difficulty of measuring effort as
compared to performance? While economic textbooks speak blithely of
marginal revenue product in infinitely substitutable models, the real
world of social endeavors rarely cooperates. There are many situations
where assigning responsibility for outcome is ambiguous, and where
determining who really contributed what to output is effectively
unknown. As those who have attempted to calibrate contributions to
team performance can testify, there are some situations where it is
easier than others. Sports teams are certainly more suited to such
calibration than production teams. But even there it is more difficult to
calibrate individual contributions in football and basketball than in
baseball. And even in baseball, arguably the easiest case of all, there
are never ending debates over different ways of measuring direct
contributions to victory in individual games, not to mention the
difficulty of assessing a player's impact on team chemistry.

Nor is measuring effort always so difficult. Anyone who has taught and
graded students knows there are two different ways—at least—to

proceed. Students' performances can be compared to each other
(output), or to an estimate of how well the student could have been
expected to do (effort). Admitting the possibility of grading at least in
part according to personal improvement (grades are not, in fact,
rewards, but also measure absolute attainment as in mastery of some
subject matter) is tantamount to recognizing that teachers can, if they
choose, measure effort—and they can do it even though they are not
in the dorm rooms of their students, monitoring their hours of study.

Now consider your workmates. They not only know your past
productivity, which means they can compare your efforts to your past
by comparing its product, they can actually see you exert each day. So
co-workers are in a far better position to judge each person's effort
than a teacher is able to judge the effort of students. Indeed, who is in
a better position to know if someone is only giving the appearance of
trying than people working with him or her in the same kind of labors?

It is actually not only more just to remunerate effort/sacrifice than
output for all the reasons we have explored, but particularly in an
economy with balanced job complexes, it is actually quite a bit easier.
Errors will by definition be much smaller. Methods can be, and in a
parecon would be, democratic and mutually acceptable. Entanglement
of effects and factors is not a problem. And it is not nearly so easy to
pull the wool over the eye's of one's workmates as it is to do so with a
supervisor, as people do today.

Chapter 15
Productivity

A Destructive Labor/Leisure Trade off?

I would rather have roses on my table
than diamonds on my neck.

— Emma Goldman

One might admire the moral and logical structure of participatory
economics, and even the incentive structure of its remuneration
scheme, yet nonetheless still have fears about parecon's output being
too low. Chapter 14 addressed critical dimensions of productivity, but
one issue that some critics have emphasized still remains. Will parecon
lead to a steadily declining output or even to stagnation and decay due
to people choosing to work too few hours?

The concern is not as odd as it might seem. In a parecon it is true that
people self-consciously decide the labor/leisure trade off and do so free
from compulsion. That is, in each new planning period each person has
two priority decisions.

1 How much, overall, do they want to consume?

2 How much, overall, do they want to work?

These two decisions are connected in that the sum total work in an
economy creates the sum total output. In turn, the sum total output
determines the average consumption per capita. We each consume
that average tweaked in accord with our effort/sacrifice rating. It
follows that to consume more either I must work more or harder than
average, or the average amount that everyone consumes must rise.
Thus, aside from any increases in productivity gained from technical or
social innovations, if I wish to consume more, I need to work more,
pure and simple. And so, as one of their largest choices, all society's
actors in the participatory planning process decide their own level of
work and simultaneously the average level of work and overall
productive output and thus the average consumption bundle across
the economy. And not only do I have to work more if I want to consume
more, but, if I wish to work less, then I will consume less.

The productivity complaint is therefore that people will collectively
work many fewer hours in a parecon than in capitalist economies, and
total output will drop compared to what it would have been had people
worked longer hours or more intensely. The complaint is likely correct,
we think, in that people will probably reduce the average time and
intensity they work in a participatory economy as compared to that
which they endure in a technologically comparable capitalist economy.
But is this alteration worthy of complaint or compliment? It is tempting
to answer snidely and leave it at that: Presumably, we should also
oppose unions because under their influence workers went from ten-
hour days to eight-hour days. Indeed, perhaps we should look back on
the twelve-hour day sweat- shops of the early Industrial Revolution era
as a near utopia. But, setting aside this easy reply, let's explore
further.

The sense in which the purported complaint is instead a compliment
ought to be clear enough. The complaint highlights that parecon is
more democratic than existing economies. In a market system more
work is compelled even if literally everyone would prefer to slow down.
Competition demands that each workplace maximize profits. But
profits go up when employees work longer and more intensely. Owners
and managers therefore seek to compel, cajole, entice, or otherwise

generate longer and more intense work by employees, and endure
similar pressures themselves, even if their personal preferences run in
the opposite direction. Marx described this central attribute of markets
with the pithy admonition that for capitalists their drive was to
"accumulate, accumulate, that is Moses and the Prophets." Juliet Schor
in her book on work and leisure in America provides an instructive
indicator. Considering the US from the period after WWII—the golden
age of capitalism—to the end of the twentieth century, Schor notes
that per-capita output approximately doubled. She points out that an
important decision should have been made in conjunction with that
increase in productive capability. That is, should we maintain or even
expand the work week to enjoy the much bigger social product that
increased productivity made possible? Or should we retain the per
capita output level of the 1950s, using the increase in productivity per
hour to reduce the work week by establishing a schedule of working
one week on and one week off, or working just two and a half days a
week, or a month or a year on and a month or a year off, with no
reduction in overall output per person. You do not have to decide
which option you prefer to note that in fact no such democratic
decision ever took place because the issue never arose. The market
ensured that work pace and workload climbed as high as they could
without causing the system to reach a breaking point. It is the market
itself and not a conscious collective and free choice that yielded the
outcome. So the sense in which the complaint about parecon's citizens
making a work/leisure choice that diminishes output is a compliment is
that in the transition from markets to participatory planning we
recapture conscious social control over determining what labor/leisure
trade-off we prefer, rather than having market competition impose on
us a singular and very debilitating outcome.

But then what is the complaint part of the observation? Presumably it
is that humanity will make this labor/leisure trade- off choice stupidly.

In other words, given that parecon permits us to choose between labor
and leisure, we will opt to work so little that the fall in output will be
horribly damaging to the economy as a whole. Either we will not
produce enough to have pleasurable lives now—and will not realize
that we can rectify that by working more—or, more subtly, while we
may ourselves do fine in the short run, future generations will suffer
dramatically compared to what might have been with more labor
expended on our part today.

The first half of this logic is not worth serious discussion. It says that
given the democratic choice between labor and leisure we will conduct
ourselves so moronically that we will starve our stomachs on behalf of
our time off, making ourselves suffer more from the hunger than we
benefit from the leisure. We need to be compelled—this argument

believes—by some outside agency, to work sufficiently to have even
the level of short-term consumption that we ourselves desire in order
to be presently fulfilled. Even without noting the change in quality of
work time and circumstances that a parecon brings, and thus the
improvement in work rather than its further debasement, as well as
the improved relevance of output to human well-being and
development as compared to enhancing firstly profit for the few as
under capitalism, this humans-are-idiots logic cannot be at the root of
a serious productivity complaint.

But the second half of the logic is more disturbing. Consider ancient
Egypt, that is, in 4,000 BC or so. At its outset, Egyptian society was
remarkable in many respects relative to others at the time, but over a
period of roughly 4,000 years it was overwhelmingly stagnant. Life was
essentially the same for each new generation as in the past, with little
application of human insight to creating new conditions better than
those enjoyed by one's parents, or grandparents, or even great great
(and repeat that word great 100 times or more) grandparents. The lack
of change in ancient Egypt is literally mind-numbing in its scale. For a
comparison, in 1900 the average life expectancy in the US was
approximately 45, and in 2000 75, and we had gone from just a few
people having barely functional telephones to omnipresent high-tech
labor-saving and sensory enhancing tools throughout society. Of
course the lack of change in Egypt had nothing to do with a
labor/leisure trade-off since most people worked horribly long
proportions of their bitterly short lives, but it does show at least the
possibility of the condition of large-scale and enduring stagnation that
parecon's critics fear. That is, the complaint's supposed dreaded
condition, stagnation, is not impossible in real historical situations. In
fact, it existed for most of human history so we must take seriously the
accusation that stagnation could arise again with transition to a
parecon. So would parecon be stagnant or not?

The complaint assumes that without the compulsion of competition to
propel productivity, humanity will fail to recognize the benefits of
increasing output, seeing only the debits of increased workloads. This
is an assumption, and a poor one at that. First, work is part of what
makes us fulfilled humans. We do it not only to meet immediate needs,
but also to express potentials and to open new future opportunities. In
parecon, there will be people whose work is to focus on innovation via
investment. They will not earn if they do not work, with duties that
would include clarifying the benefits of innovations to society to induce
willingness among people to undertake them.

Most people under capitalism hate their jobs—and with good reason.
But some auto workers who hate their jobs enjoy working on their cars

after hours; some people with deadening careers serve in the local
volunteer fire department. People don't mind work—it gives their lives
meaning—what they hate is alienated labor. And jobs in parecon are
designed precisely to minimize the alienation of labor and maximize
creative and empowering work. Moreover, do parents not understand
that the lives of their children will be improved by contemporary
investments and will they not, therefore, allot some of their energies to
improving future prospects? Consider how parents now choose to
spend their meager incomes as between their own pleasures and those
of their children. Is it remotely plausible that with improved conditions
of work, improved dignity at work, improved quality of life from the
products of work which are justly distributed, and greatly enhanced
educational opportunities turning us all into confident agents and
decision-makers, that we should decide not only to work less—which is
reasonable enough— but, year in and year out, to work so much less
that we and our children will suffer because of the choice? Is this a
serious prospect at all, much less one that should cause us to doubt
the desirability of replacing markets with participatory planning as a
means to increase equity, solidarity, diversity, and in particular self¬
management?

Everyone has to decide for themselves, of course, but consider Schor's
example mentioned earlier. Suppose in 1955 the US had adopted a
participatory economy. What would have been the impact on total
volume of work and output—and derivatively on progress— even
ignoring other benefits? The quality of work for 80 percent of the
workforce would have improved greatly. Waste production of all kinds
would have diminished and disappeared. Needless and excessive
production would have disappeared as well. Innovations would have
aimed at bettering the quality of work and consumption, not
maximizing profit. And then there would have been the reductions in
military, advertising, and luxury expenditures, and the gains in
education and talent thereby made available for scientific, engineering,
artistic, aesthetic, and other advances. So let's call the total output in
1955 Y. What would have happened in the 40 years after WWII if we
assume a parecon rather than a capitalist economy? Productivity per
person would have doubled in our hypothetical example (though in
reality it would do much better, not least because of increased
creativity and talent devoted to the issue, but also because instead of
innovation aiming at profit it would aim directly at fulfillment). As well,
there would have been more public goods, of course. Less output need
have been devoted to cleaning up pollution and curing socially caused
diseases and to managing resistant workers, because all these adverse
features would have been diminished or eliminated. Less would have
gone into advertising to sell goods for reasons that have nothing to do
with benefiting those who buy them because there would no longer

have been any interest in doing that. Less would have gone to
projecting military power, and to providing luxuries to the rich, and to
incarcerating the poor, for similar reasons. This would all have
occurred, in other words, because there would have been less pollution
since we would have assigned proper values to external effects, fewer
conditions that sicken citizens for the same reason, no managers
above workers or workers below managers due to parecon's balanced
job complexes, no incentive to produce and distribute other than to
meet real needs, no accumulation compulsions, no world to subjugate
in order to profit by ripping off resources and energies from other
countries, no rich to luxuriate, no poor forced to steal, and so on. The
point is, in addition to per-capita productivity doubling (or more) in the
forty years in question, since much of Y in 1955 had nothing to do with
human well-being in the first place and would have been replaced by
new outputs that do benefit human well-being, not only would output
per person have doubled due to technical innovations, but the
relevance of output to fulfillment would have also gone dramatically
upward, let's say, very conservatively, by another 25 percent due to
useless and pointless and even destructive production being removed,
and desirable production put in its place. With just distribution it then
would follow that the population could have opted to work in 1995 not
only half as long as in 1955, as Schor suggested, but a bit more than a
third as long, and still have the same per capita output relevant to
meeting real needs and to expanding worthy potentials. At the same
time, investment in innovation could have gone on all along at the
same rate it did in 1955 under capitalism. So the workweek could go
from 40 hours to about 13, in that scenario, over a run of 40 years,
with no loss in fulfillment or in output earmarked to engender socially
beneficial progress. Does anyone think that humanity is so blindingly
lazy that it would opt to cut back work that is no longer alienated even
that far, much less to cut it back still further? Isn't it far more plausible
that humanity would, in fact, opt for a lesser cutback, say from 40 to
30 or perhaps 25 hours, with, as well, a considerable number of those
saved hours going to highly productive hobbies, volunteer pursuits,
and self-education? In short, looked at in full context, the productivity
complaint is not a serious one, but instead a compliment in disguise.

Chapter 16

Creativity / Quality

Does Parecon Sacrifice Talent?

Does It Subordinate Quality To Equity

Between persons of equal income there is no social distinction except the distinction
of merit. Money is nothing: character, conduct, and capacity are everything. Instead
of all the workers being leveled down to low wage standards and all the rich leveled
up to fashionable income standards, everybody under a system of equal incomes
would find her and his own natural level. There would be great people and ordinary
people and little people; but the great would always be those who have done great
things, and never the idiots whose mothers had spoiled them and whose fathers had
left them a hundred thousand a year; and the little would be persons of small minds
and mean characters, and not poor persons who had never had a chance. That is why
idiots are always in favor of inequality of income (their only chance of eminence), and

the really great in favour of equality.

— George Bernard Shaw

In our experience, every time participatory economics is described,
musicians, writers, painters, performers, playwrights, actors, dancers,
and many other creative artists raise a ruckus. This sector of workers
feels immediately profoundly threatened. They worry that parecon will
sacrifice the benefits of talent, or, even worse, will mistreat the
talented, particularly in the realm of art and creative expression. We
need to address their concerns.

Parecon takes for granted and celebrates the fact that different people
have different inclinations and capacities in a very wide range of ways.
Some are artistic, some not. Some are mathematical, some not. Some
have great bodily coordination or strength, some not. And even among
people with special competence in any one area—say some particular
mathematical facility, music composing abilities, or whatever else—
there will be a wide range of abilities. There are Einsteins and
mediocre physicists, Mozarts and mediocre composers. Additionally,
there is no cause to be upset by any of this variation. Diversity of
orientation and talent means life is far more varied and rich than it
would otherwise be. We all benefit from the existence of diverse
talents and ranges of talent, both because we can enjoy its products
and vicariously enjoy the processes as well.

We contend that parecon celebrates and creates a context conducive
to the full discovery and development of diverse talents— not solely in
a few lucky people born "well," but in everyone, and not solely where
the talent can yield profits for elites but wherever it can have social
benefit. At the same time, by its remuneration norms and balanced job
complexes, parecon precludes such differences in talents from
imposing hierarchies of power or wealth that corrupt sociality. We get
to have our cake baked, and baked to perfection, and we get to eat it,
and we suffer no nasty side effects.

Musicians, writers, and other artists of diverse kinds have two different
negative reactions to parecon. One is no different from a reaction that
a surgeon, lawyer, professor, or engineer might have (or a professional
athlete, for that matter). That is, they say "wait a minute, you are
saying I will have to do my fair share of more onerous work, and I
would rather not.” This is an understandable but unworthy sentiment.

It is like capitalists saying, "wait a minute, you are implying that I must
forego my golden-egg machine, my ownership." Correct. Parecon says
both that owners must forego their ownership and that coordinator
class members must forego their monopoly on empowering work and
take on a balanced job complex, and we have argued at length why—
for example, to remove class division, to attain equity, to allow and
promote self-management, and so on.

A different concern of artists, often mingled with the above class
defensiveness, is that somehow they will not be allowed to engage in
artistic pursuits at all, or at least as they prefer, even if they are happy
to work in a balanced job complex, which many artists already largely
do, by the way, cleaning up for themselves, pre- paring their tools, and
so on. Their worry is that the participatory economy will decide that
music or video or movies or art or whatever else should not be
produced other than in cases where there is a great immediate public
demand for it. They worry that experimentation, exploration, and
investigation of new avenues that are initially not widely understood,
much less appreciated, will be ruled out in a parecon. But this concern
is unwarranted, for artists and others too.

Consider people who produce bicycles or who do surgery. If they could
not experiment with new designs and methods, we would never get
new features on bicycles or new surgical procedures. And it is the
same for making computers or conceiving tools for building houses,
software, or furniture. Progress in any domain, not just art, requires not
only innovative thinking, but the opportunity for it to be discovered,
refined, tested, implemented, and appreciated.

Likewise, innovations in bicycles or in surgery do not have to be only
for all riders or for everyone who needs an operation to be worth
pursuing or adopting. There could be an innovation that greatly
benefits a small number of people that most other people don't utilize
at all but that is worth pursuing, of course, if the social benefit that the
few gain is more than the social cost of the innovation.

No one encountering a description of parecon worries that bicycle
workers or surgeons will be precluded from thinking about how to
make advances in their fields under a parecon. This is just a part of
each job. Of course a bicycle worker who has an idea for an innovation

doesn't automatically get to spend a lot of time pursuing it at work, nor
does a surgeon, for that matter. If others in the field think it is
nonsense and refuse to respect the undertaking, the person with the
idea may have to pursue it in spare time or sometimes not at all. But
even though everyone knows this can sometimes lead to errors,
everyone also knows it is a very sensible approach. Who better to
judge whether an innovative idea deserves support than others in the
same field, especially given the shared motivations and institutional
context?

What is different about artists, one wonders? In a word, the answer is,
however surprising to some it may be, nothing.

Consider video, literary, or any other type of artistic work in artistic
workplaces. It could be schools. It could be conservatories. The artists
and others involved—film makers, painters, whatever—would have
councils, like other workers, and of course they would undertake
balanced job complexes. They would get effort ratings. If they needed
inputs, new equipment, or whatever else, the requests would be part of
their workplace plan.

Will a musician be kept on as an employee if he or she wishes to
pursue some unusual idea? Unless it is lame-brained, why not? Why
should we be confident of this? Because not only the artist's fellow
artists but the whole population has no trouble understanding the
desirability of wide-ranging artistic exploration.

The problem many artists have with parecon is an odd kind of
projection. They project from the current situation—where there are
right-wing and profit-seeking sponsors who undeniably bend artistic
endeavor to commercial ends and subordinate it to narrow tastes—to
parecon, where decisions would be made by their fellow artistic
workers and the broad public in a context that would lack such
commercial drives, profit-seeking, and narrow-minded con- formist
ignorance. The concern is misguided, as we conclude from all the
experience and reason we have.

But let's suppose, against all contrary argument, that there is some
truth here. Suppose that in exchange for security, respect,
classlessness, an end to subordination to profit, a redirection of
production and consumption—some excellent and deserving artists
sometimes have to pursue their creative dreams in their off-hours
because they cannot get their fellow artists and consumers to
recognize that their ideas are socially/aesthetically worthy. Even in this
unlikely eventuality, we are, at worst, on this score and this score

alone, back to where we have typically been in capitalist and otherwise
hierarchically organized societies all along.

It is therefore hard to see how it can be even a slight, much less a
serious problem to trade from a system where profit-seeking capitalists
arbitrate what art is worthy, to a system in which fellow artists and
consumers are the judges. And the same broad analysis as for artists
holds, by the way, for innovative mathematicians, or for special
athletes, and so on.

Parecon fosters quality and justice for humanity via balanced job
complexes plus remuneration for effort and sacrifice for socially valued
productive labor. In other words, parecon does not pursue equity by
trying to attain a common denominator of accom- plishment. Quite the
opposite, parecon promotes the fullest possible development and
utilization of diverse talents in creating the richest and most diverse
art attainable, but it also preserves equity of remuneration and
circumstances, as well as self-management. Each of these aims, we
might add, is essential to maintaining an environment in which artists
can best express themselves and the public can best appreciate their
labors.

Chapter 17

Meritocracy / Innovation

Does Excellence Get Its Due?

Is Progress an Important Product?

Surely there never was such a fragile china-ware as that of which the millers of
Coketown were made. Handle them ever so lightly, and they fell to pieces with such
ease that you might suspect them of having been flawed before. They were ruined,
when they were required to send labouring children to school; they were ruined,
when inspectors were appointed to look into their works; they were ruined when such
inspectors considered it doubtful whether they were quite justified in chopping
people up with their machinery; they were utterly undone, when it was hinted that
perhaps they need not always make quite so much smoke. Whenever a Coketowner
felt he was ill-used - that is to say, whenever he was not left entirely alone, and it
was proposed to hold him accountable for the consequences of any of his acts - he
was sure to come out with the awful menace, that he would 'sooner pitch his
property into the Atlantic’. This had terrified the Home Secretary within an inch of his

life, on several occasions.
— Charles Dickens

According to the dictionary, a meritocracy is "a system in which
advancement is based on individual ability or achievement." The virtue
is that excellence gets its due. Is parecon meritocratic? Similarly,
progress depends on incorporating new means of meeting needs and
expanding potentials while also expanding gains bearing on less
economic values. Does parecon enhance or somehow subvert the
possibilities of progress?

Merit

Of course, any system that rewards having a deed to property in one's
pocket but doing nothing or that rewards having lots of bargaining
power but doing nothing is not a meritocracy. But what about genetic
endowment, doesn't that come under the rubric of individual ability?
And what about contribution to output? Isn't one person's contribution
(even if enhanced by better tools or the luck of producing something in
greater rather than lesser need) part of individual achievement and
merit? In our view, rewarding merit ought to mean rewarding us for
what we've earned; but, as we've argued previously, good genes are
no more earned than noble birth. Nevertheless, we must admit that in
everyday language genes and contribution to output are considered
part of merit. So if rewarding these can only mean remunerating them
materially or with access to enhanced formal influence over decisions,
then in that sense parecon is not a meritocracy. On the other hand if it
were satisfactory to appreciate these contributions and to convey
respect and thanks for them, but not to convey power or wealth for
them, parecon would still qualify as a meritocracy. Since we are
rebutting a criticism, we will assume the generally accepted definition
of meritocracy, making the criticism correct. Is it damning?

To feel this is a serious problem for parecon, you either have to feel
that individual contribution to output should be rewarded in principle
and on moral grounds—which we don't, as we have argued—or that in
not rewarding it, some other outcome will have a negative effect on
your system so that excellence will not be sufficiently promoted by the
economy and we will suffer its loss.

Parecon is designed to maximize the motivating potential of non¬
material incentives. There is every reason to hope jobs designed by
workers will be more enjoyable than ones designed by capitalists or
coordinators. There is every reason to believe people will be more
willing to carry out tasks that they themselves proposed and agreed to
than assignments handed them by superiors. There is also every
reason to believe people will be more willing to perform unpleasant

duties conscientiously when they know the distribution of those duties
as well as the rewards for people's efforts are equitable.

But all this is not to say that there are no material incentives in a
parecon. One's peers—who have every interest in seeing that those
they work with fulfill their potentials—will rate one's efforts. No one can
manifest genetic endowment or utilize advantageous tools or training
without exerting effort, and the incentive to exert effort is therefore
also a material incentive to manifest these, even if not as large an
incentive to do so as remunerating for output would be.

It is true we do not recommend paying those with more training higher
wages since we believe it would be inequitable to do so. But that does
not mean people would not seek to enhance their productivity by
becoming more knowledgeable. First of all, education and training
would be public expenses, not private. So there are no material
disincentives to pursuing education and training. Secondly, since a
parecon is not an "acquisitive" society, respect, esteem, and social
recognition would be based largely on "social serviceability" which is
enhanced precisely by developing one's most socially useful potentials
through education and training. In a parecon you do not rise in the
eyes of your neighbors or peers due to owning more, but for your
personal qualities and achievements. And then there is of course the
simple personal inclination to do what one can do well in order to
express one's greatest capacities, and enjoy the satisfactions that
come from doing so. In other words, merit gets its due, appropriately.

Innovation

The same logic as evidenced above applies to innovation, which
explains why we lump meritocracy and innovation in a single chapter.

A parecon does not reward those who succeed in discovering
productive innovations with vastly greater consumption rights than
others who make equivalent personal sacrifices in work but discover
nothing. Instead a parecon emphasizes direct social recognition of
outstanding achievements for a variety of reasons. First, successful
innovation is often the outcome of cumulative human creativity so that
a single individual is rarely entirely responsible. Furthermore, an
individual's contribution is often the product of genius and luck as
much as diligence, persistence, and personal sacrifice, all of which
implies that recognizing innovation through social esteem rather than
material reward is ethically superior. Second, underneath the
protestations, there is really no reason to believe that with changed
institutional relations social incentives will prove less powerful than

material ones. It should be recognized that no economy ever has paid
or ever could pay its greatest innovators the full social value of their
innovations, which means that if material com- pensation is the only
reward, innovation will be under-stimulated in any case. Moreover, too
often material reward is merely an imperfect substitute for what is
truly desired: social esteem. How else can one explain why those who
already have more wealth than they can ever use continue to
accumulate more?

Nor do we see why critics believe there would be insufficient incentives
for enterprises to seek and implement innovations, unless they
measure a parecon against a mythical and misleading image of
capitalism. Typically, in economic analyses of markets it is presumed
that innovative capitalist enterprises capture the full benefits of their
successes, while it is also assumed that innovations spread
instantaneously to all enterprises in an industry. When made explicit,
however, it is obvious that these assumptions are contradictory since
in capitalism for a company to reap the full financial benefits of an
innovation it must keep all rights to it, even secretly, yet for other
companies to benefit they must have full access. Yet only if both
assumptions hold can one conclude that capitalism provides maximum
material stimulus to innovation and also achieves maximum
technological efficiency throughout the economy. In reality, innovative
capitalist enterprises temporarily capture "super profits” also called
"technological rents" which are competed away more or less rapidly
depending on a host of circumstances. This means that in reality there
is a trade-off in market economies between stimulus to innovate and
the efficient use of innovation, or a trade-off between dynamic and
static efficiency. It can't be that firms monopolize their innovations, on
the one hand, and that all innovations are utilized as widely in the
economy as is beneficial for output and operations, on the other hand.
But the former needs to occur for maximum incentive and the latter for
maximum efficiency, in a market system.

In a parecon, however, workers also have a "material incentive," if you
will, to implement innovations that improve the quality of their work
life. This means they have an incentive to implement changes that
increase the social benefits of the outputs they produce or that reduce
the social costs of the inputs they consume, since anything that
increases an enterprise's social-benefit-to-social-cost ratio will allow
the workers to win approval for their proposal with less effort, or
sacrifice, on their part. But adjustments will render any local
advantage they achieve temporary. As the innovation spreads to other
enterprises, indicative prices change, and work complexes are re¬
balanced across enterprises and industries, the full social benefits of
their innovation will spread equitably to all workers and consumers.

The faster these adjustments are made, the more efficient and
equitable the outcome. On the other hand, the more rapidly the
adjustments are made, the less the "material incentive” (other than
that afforded to the effort/sacrifice involved) to innovate locally, and
the greater the incentive to coast along on others' innovations. While
this is no different than under capitalism or any market arrangement, a
parecon enjoys important advantages. Most important, direct
recognition of social serviceability is a more powerful incentive in a
participatory economy than a capitalist one, and this considerably
reduces the magnitude of the trade-off. Second, a parecon is better
suited to allocating resources efficiently to research and development
because research and development is largely a public good which is
predictably under-supplied in market economies but would not be in a
parecon. Third, the only effective mechanism for providing material
incentives for innovating enterprises in capitalism is to slow their
spread at the expense of efficiency. This is true because the
transaction costs of registering patents and negotiating licenses from
patent holders are very high. Capitalist drug companies claim there is
no incentive for them to develop new drugs unless they can reap vast
profits by patenting their products. This may be true under market
capitalism, but the patents that induce them to innovate also often
keep the drugs out of the hands of those most in need, so this is hardly
an efficient system. In a parecon, on the other hand, investment
decisions are made democratically—so research and development will
occur wherever there is a need, and no one has any incentive to keep
innovations from being adopted by others—so there is maximum
diffusion of new products and techniques.

Of course, in a parecon, the rules of the game are subject to
democratic adjustment. If it were determined that there was
inadequate incentive to innovate—which we doubt—various policies
could be tweaked. For example, the recalibration of the work
complexes for innovating workplaces could be delayed (to allow those
workplaces to capture more of the benefit of the innovation, or extra
consumption allowances could be granted to innovators for a limited
period of time. Such measures would be (in our view) a last resort, but
would in any event depart from equity and efficiency far less than in
other economic systems, and in no systematic recurring fashion.

In general, much of what parades itself as scientific opinion about
incentives is plagued by implicit and unwarranted assumptions
predictable in an era of capitalist triumphalism. One should be neither
as pessimistic about the motivational power of nonmaterial incentives
in an appropriate environment as many people otherwise critical of
injustice have become, nor should one see any obstacles to the
deployment of limited material incentives specifically for innovation in

a parecon should its members decide they are needed. In the end
there is no reason to doubt the efficacy of a mixture of material and
social incentives during the process of creating an equitable and
humane economy, with the balance and mix chosen to further equity,
diversity, solidarity, and self-management for all— rather than simply
generating advantage for a few.

Chapter 18
Privacy / Frenzy

Do Parecon's Citizens Lack a "Room of Their Own"?

Does Anyone Have Time for Anything But Economics?

People's lives are in turmoil. There is a sense of crisis for men as well as for women,
and for children too. Do we have an idea or even a glimmering about how people can
and should live, not as victims as in the past for women, nor as atoms just whirling
around on their own trajectories, but as members of a human community and as

moral agents in that community?

— Barbara Ehrenreich

Any economy on some counts is good, of course, but if it is really bad
on other counts, it can lose much of its luster. Does parecon achieve
equity and its other virtues by sacrificing people's privacy or by
imposing unreasonable pressures on people to participate when they
would rather be doing other things?

In "A Roundtable Discussion on Participatory Economics” in Z Magazine
(July/August 1991), Nancy Folbre referred to this problem as the
"tyranny of the busy-body" and the "dictatorship of the sociable." In a
class my frequent co-author taught at American University, this issue
came to be known as "the kinky underwear problem." Folbre also
cautioned of the potential inefficiency of groups dominated by the
sentiment "Let's not piss anybody off.” David Levy observed in a
Dollars and Sense (November 1991) book review that while the 1991
book on parecon that Robin Hahnel and I authored, Looking Forward,
reminded him in some respects of Ursula LeGuin's novel The
Dispossessed, readers should be warned that LeGuin's subtitle was "An
Ambiguous Utopia” because "reliance on social pressure rather than
material incentives create a lack of initiative, claustrophobic
conformity, and intrusiveness." In comradely private communication,
radical economist Tom Weisskopf cautioned against "sacrificing too
much individuality, specialization, diversity, and freedom of choice."
What is the source of these misgivings, and how do we respond?

Parecon recognizes that economic decisions about both consumption
and production affect more than the immediate consumer or producer.
And parecon also asserts that those affected by decisions should have
proportionate influence over them. Does this yield a situation in which
everyone is so continually subordinate to oversight by others that
privacy disappears? Does it empower only those who enjoy being
involved in planning and making decisions and disempower those who
are less socially concerned? Does it impose too many meetings and,
even after reducing the work week, leave us all spending too much
time hassling over economic choices?

A Busybody Economy?

For us it is important to distinguish between misgivings that any and
all participatory processes may be too intrusive into people's private
lives, and the criticism that particular measures which may or may not
be adopted in a specific parecon are more socially intrusive than they
need to be. First, let us reiterate features of our model designed to
protect the citizenry from tyrannical busybodies.

Beside being free to move from one neighborhood (or job) to another,
and besides being able to make consumption proposals anonymously,
consumption proposals justified by one's effort rating cannot be easily
vetoed. While there is always, of course, nothing but a motion to close
debate or at least silence the loud mouth to prevent a busybody from
carrying on uselessly about someone else's consumption request, it is
difficult to understand why people would choose to waste their time
expressing or listening to views that had no practical consequence.

And the fact that individuals can make anonymous consumption
requests if they do not wish their neighbors to know the particulars of
their consumption habits keeps this from becoming a serious problem
at all.

All societies have to face a tension between leaving people alone and
taking care of those who need it. Should a society sponsor public
service announcements pointing out the harm of cigarette smoking, for
example? People with strong views will hope to persuade other people
to do what they think is in their best interest even if they cannot (and
would not even want to) force them to do so. In a parecon, animal-
rights folks, if they live in a community with meat eaters, may get up
at meetings and urge their fellows not to slaughter innocent, sentient
creatures for their "Big Macs." If the meat-eaters respect others they
will listen to their arguments, though perhaps ultimately reject their
views. But neither side will go through this over and over, and no doubt

political or economic deliberative assemblies in a parecon might
establish guidelines to separate out serious issues from harassment.
But the same problems exist in a capitalist democracy: I can picket
outside a McDonald's denouncing meat-eating or outside a fur-coat
store—or outside the Gap for selling items using child labor, even
confronting buyers personally. Would we rather a society that was less
intrusive even than that, and that did not permit picketers to criticize
buyers and sellers at all for their choices?

Dictatorship of the Sociable

In workers' councils balancing job complexes for empowerment should
alleviate one important cause of differential influence over decision¬
making. Rotating assignments to committees also alleviates even
temporary monopolization of authority. On the other hand, we stopped
short of calling for balancing consumption complexes for
empowerment and refused to endorse forcing people to attend or
remain at meetings longer than they found useful. An apt analogy is
the saying "You can lead a horse to water, but you can't make it
drink." Parecon has every intention of leading people to participate,
but no doubt, some will drink more deeply from the well of
participation than others, and those who do, will—other things being
equal—probably influence decisions disproportionately. And likewise,
folks who continually have very good ideas about decisions might have
their ideas adopted more often (which is not the same, however, as
having more weight in the decision- making itself—in a parecon people
have proportionate say). But even those who are more sociable, or who
regularly have good ideas and who as a result more often influence the
views of others and thus the outcomes of decisions, would have a
difficult time benefiting materially from their efforts, and the less social
should suffer no material penalty as a result. In any case, while we find
the complaint more amusing than worrisome, certainly even someone
who agrees with its orientation would have to also agree that it would
be better to have a dictatorship of the sociable with no material
privileges accruing to them, than a dictatorship of the propertied, of
the bureaucrats and party members, or of the better educated, all with
great material privileges accruing.

We also fail to understand why parecon does not seem to all who
consider it as thoroughly libertarian as we intended. People are free to
apply to live and work wherever they wish, and society may have very
stringent rules about rejecting people on unwarranted grounds (such
as race, gender, etc.). People can ask for whatever consumption and
services they desire and can distribute their consumption over their

lives however they see fit. People can apply to whatever educational
programs they want. Any individual or group can start a new living
unit, a new consumer council, or a new worker council, with fewer
barriers to overcome than in any traditional model. The only restriction
is that the burdens and benefits of the division of labor be equitable.
That is why people are not free to consume more than their sacrifice
warrants. And that is why people are not free to work at job complexes
that are more desirable or empowering than others. It may be that
some chafe under these restrictions or consider them excessive. Once
upon a time people chafed at the idea that slavery would be abolished
and their "freedom to own slaves” eliminated. We believe the logic of
justice requires the pareconish restrictions on "individual freedom” just
as the logic of justice places restrictions on the freedom to profit from
private ownership of productive property or of slaves.

Too Many Meetings?

It is not uncommon that when told that workers and consumers will
cooperatively plan economic outcomes in their own workplaces and
consumption councils as well as interactively for the whole economy,
people throw up their hands and say—sure being more just, more
equitable, more this and more that is nice, but not if I have to live my
life in interminable meetings.

Part of the reason for this reaction may be that people are already
enduring too many meetings and that the meetings people now endure
are horribly alienating. Pat Devine, a radical economist from England
who proposes a more mixed approach to allocation than we favor but
encounters a similar complaint, reports that:

In modern societies a large and possibly increasing proportion of overall social time is
already spent on administration, on negotiation, on organizing and running systems
and people. This is partly due to the growing complexity of economic and social life
and the tendency for people to seek more conscious control over their lives as
material, educational, and cultural standards rise. However, in existing societies
much of this activity is also concerned with commercial rivalry and the management
of the social conflict and consequences of alienation that stem from exploitation,
oppression, inequality, and subalternity. One recent estimate has suggested that as
much as half the GNP of advanced western countries may now be accounted for by
transaction costs arising from increasing division of labor and the growth of
alienation associated with it.

The implication of this insight is interesting. Perhaps a good economy
can not only increase equity and self-management but even reduce
the aggregate time devoted to running the economy, though, in
Devine's trenchant words, "the aggregate time would be differently

composed, differently focused, and, of course, differently distributed
among people."

David Levy reviewed Looking Forward in Dollars and Sense (November
1991). He makes a similar point to Devine.

Within [current capitalist] manufacturing firms we find echelons of managers and
staff whose job it is to try to forecast demand and supply. Indeed, only a small
fraction of workers directly produce goods and services. The existing system requires
millions of government employees, many of whom are in jobs created precisely
because the market system provides massive incentives to engage in fraud, theft,
environmental destruction, and abuse of workers' health and safety. And even during
our 'leisure time’ we must fill in tax forms and pay bills. Critics of Looking Forward's
complex planning process should examine the management of a large corporation.
Large corporations are already planned economies; some have economies larger
than those of small countries. These firms supplant the market for thousands of
intermediate products. They coordinate vast amounts of information and intricate
flows of goods and materials.

In sum, "meeting time" is far from zero in existing economies. But for a
parecon we can divide the issue into meeting time in workers' councils,
consumers' councils, federations, and participatory planning.

Conception, coordination, and decision-making are part of the
organization of production under any system. Under hierarchical
organizations of production relatively few employees spend most, if
not all, of their time thinking and meeting, and most of the rest of the
employees simply do as they're told (or try not to do as they are told).
So it is true, most people would spend more time in workplace
meetings in a parecon than in a hierarchical economy. But this is
because most people are excluded from workplace decision-making
under capitalism and authoritarian planning. It does not necessarily
mean the total amount of time spent on thinking and meeting rather
than on working would be greater in a participatory workplace. It is
important to remember that in a parecon decisions are taken at
appropriate levels of organization. The whole workplace doesn't meet
to decide everything, of course. Rather some things are decided
widely, others more narrowly, though each within a framework
established at a more inclusive level. And while it might be that
democratic decision-making requires somewhat more overall meeting
time than autocratic decision-making, it should also be the case that a
lot less time is required to enforce democratic decisions than
autocratic ones. It should also be clear from our discussions of the
daily circumstances and behavior in participatory workplaces that
workplace meeting time is part of the normal parecon workday, not an
incursion on people's leisure.

Regarding the organization of consumption, we plead guilty to
suggesting that these decisions be arrived at with more social
interaction than in market economies. In our view one of the great
failures of market systems is that they do not provide a suitable
vehicle through which people can express and coordinate their
consumption desires to everyone's greater good. When you enter a
five-story apartment building with no elevators and see old people on
the top floors and young ones on the lower floors, when you enter a
community and see huge numbers of appliances that are rarely used
with the redundancy of their parallel dormancy eating up budgets and
preventing people from having the wherewithal to get more fulfilling
luxury items, and when you consider what can be accomplished by
replacing isolated individual choices with mutually concerned collective
ones, you get a feel for the material reason—in addition to the
participatory and self-managing reason—for consumption councils. It is
through a layered network of consumer federations that we propose
overcoming alienation in public choice and the isolated expression of
individual choice that characterize market systems. Whether this will
take more time than the present organization of consumption will
depend on a number of trade-offs, but in any event, in our view this
would not be too high a price to pay.

Presently economic and political elites dominate local, state, and
national public choice. For the most part they operate free from
restraint by the majority, with periodic time-consuming campaigns
mounted by popular organizations to rectify matters that get grossly
out of hand. In a parecon people would vote directly on collective
consumption issues. But this would not require a great deal of time or
mean attending endless meetings. Expert testimony and differing
opinions would be aired through democratic media. People would
become empowered through participation, and meetings would have
concrete outcomes so most people would want to participate. If it
turned out that most people didn't bother to attend (like typically
occurs now in union meetings) then we could conclude there was
something wrong with the institutions. But still, people would be free to
pay as much or as little attention as they wished.

We actually believe the amount of time and travail devoted to
consumption decision-making in our model would be less than in
market economies. Consumer federations could operate exhibits for
people to visit before placing orders for goods that would be delivered
directly to neighborhood outlets. Research and development units
attached to consumer federations would not only provide better
information about consumption options, but a real vehicle for
translating consumer desires into product innovation. While the
prospect of proposing and revising consumption proposals within

neighborhood councils might appear to require significant meeting
time, we tried to describe in detail how, with the aid of computers and
rather simple software packages, this need not take more time than it
takes people currently to prepare their tax returns and pay their bills.

In any case, nobody wouldn't have to attend meetings or discuss their
neighbors' opinions regarding consumption requests if they chose not
to; individuals could choose whether to utilize or ignore the greater
opportunities for efficient social interaction prior to registering
consumption preferences; and time necessary for consumption
decision-making would be treated like time necessary for production
decision-making—as part of one's obligations in a parecon, not part of
one's leisure time. And perhaps most intangibly, yet very importantly,
the core activity of life would no longer be to "shop till you drop,"
including finding stores, comparing competing items with negligible
differences, fighting traffic, and making purchases for reasons having
little or nothing to do with real freely-developed need and desire. This
might make sense in a capitalist society that curtails other options for
fulfillment and lumps social intercourse and modes of attaining dignity
and status overwhelmingly into market mediated consumption. But it
would make no sense in any sensibly-organized society. Reducing the
centrality of atomized consumption-related activities in people's lives
should more than compensate for any additional time required for
consumption decision-making, even ignoring other benefits.

But how much meeting time does participatory planning require?
Contrary to critics' presumptions, we did not propose a model of
democratic planning in which people or their elected representatives,
meet face-to-face to endlessly discuss and negotiate how to coordinate
all their activities. Instead we proposed a procedure in which
individuals and councils submit proposals for their own activities,
receive new information including new indicative prices, and submit
revised proposals until they reach a point of agreement. Nor did we
suggest meetings of constituents to define feasible options to be voted
on. Instead we proposed that after a number of iterations had defined
the major contours of the overall plan, the staffs of iteration facilitation
boards would (mechanically) define a few feasible plans within those
contours for constituents to vote on without ever having to meet and
debate these at all. Finally, we did not propose face-to-face meetings
where different groups would plead their cases for consumption or
production proposals that did not meet normal quantitative standards.
Instead we proposed that councils submit qualitative information as
part of their proposals so that higher-level federations could grant
exceptions should they choose to.

But while we do not think the criticism of "too many meetings" is
warranted, we do not want to be misleading. Informed, democratic

decision-making is different from autocratic decision-making. And
conscious, equitable coordination of the social division of labor is
different from the impersonal law of supply and demand. We obviously
think the former, in each case, is greatly preferable to the latter. But
this is not to say we do not understand that this requires, almost by
definition, increases in meaningful social intercourse.

Chapter 19

Individuals / Society

Does Parecon Over-Privilege Individuals
Above the Community Or Vice Versa?

Why should workers agree to be slaves in a basically authoritarian structure? Why
shouldn't communities have a dominant voice in running the institutions that affect

their lives?
— Noam Chomsky

Part of the complication of conceiving a good society, or any good
social institutions, is the subtle relationship between individual and
collective. On the one hand people are social beings. We depend on
others. We influence and are influenced by one another. Our acts need
to be compatible with those of others in ways that make the
interaction beneficial. On the other hand, we each have our own wills
and preferences and we each want room to move and choose as
individuals, and even to run up against and differ from one another.

One can imagine economies that err on either side of this divide. An
economy could privilege individuals and therein lose track of the need
for mutuality and collectivity. It could generate actors isolated from
one another and too often at odds with one another. It could cause us
to fail to benefit from possible but foregone collectivity. Or an economy
could privilege collectivity and therein deny individual freedom. It
could subordinate each individual to overarching features that negate
personal preferences. Does parecon suffer either of these ills?

Privileging Individuals?

Some have suggested that parecon overly concentrates on popular
participation in small and local decisions at the expense of larger social
issues. They say it privileges individual participation undervaluing the
need for larger collective consistency. Since democracy is not costless
to practice, we should economize on its use, they argue, while parecon
overdoes democracy locally at the cost of under-attending larger
issues.

Such critics are right that we should reject a model that diverts
people's participatory energies from more important to more trivial
issues. More, it is easy to see how a presentation of parecon that
focuses on local councils and provides only summary descriptions
could lead some to conclude that parecon attaches too little
importance to long-term investment. But the missed reality is that
parecon's procedures of participatory planning are not only
appropriate for local involvements but also appropriate for long-run
and large-scale involvements. The options are:

1 To relegate long-run decision-making to the vagaries of the
marketplace.

2 To entrust long-run decision-making to a political and technical
elite.

3 To permit councils and federations of workers and con- sumers to
propose, revise, and reconcile the different components of long-run
economic involvements.

Of course, we favor the third option, given our prioritization of self¬
management. Laissez-faire market systems are unarguably least
appropriate for long-run development decisions. Even the terribly
flawed Soviet version of central planning demonstrated important
advantages over market economies in that regard. Moreover, every
historical case of successful development by a late comer to the world
arena has been an example of the efficacy of planning rather than
laissez-faire competition. Even in pre- dominately market economies, a
cursory look shows that a huge proportion of long-run production takes
place under the purview of the state including most high tech
innovation in the US, or of massive private institutions operating more
or less in the manner of the state, which is to say, employing planning.

If we reject the vagaries of the marketplace for long-run decision¬
making, of course, if a political and technocratic elite is not chosen
democratically, the dangers are obvious. But even supposing we chose
those who we opted to entrust to conceive and negotiate a long-term
plan democratically, there would be less room for popular participation

and less resemblance to real self-management than under
participatory planning. Since we agree with those worried about over¬
privileging the local that choosing between transforming coal mining to
dramatically improve health and safety and replacing highway travel
with a high-speed rail system or transforming agriculture to conform to
ecological norms vitally impacts people's lives, we also agree that
popular participation should be maximized in these matters just as in
deciding daily consumption options.

So, as always, the issue comes down to how can ordinary people best
become involved in decision-making? In our view the feder- ations of
coal miners, rail workers, automobile makers, and agricultural workers,
and the transportation, food, and environ- ment departments of the
national federation of consumers should all play a prominent role in
formulating, analyzing, and comparing long-run options like those
mentioned above. In parecon, the skilled staffs of iteration facilitation
boards and skilled workers in R&D units working directly for involved
federations would play an active role in proposing long-term options.
But the main point is, in parecon with the aid of accurate indications of
social costs and benefits, workers and consumers, through their
councils and federations of councils, can decide long-term planning
just as they can decide annual planning and manage their own work
and consumption. Large-scale and small-scale decisions are treated
the same. The former is certainly not subordinated to the latter.

Over-Privileging Society?

Just as an economy could overlook the global in seeking to address the
local, an economy could also do the reverse, subordinating individuals
to a stifling national conformity and regulation. Does a parecon have
this failing?

It is hard for us to credit this criticism seriously. Parecon, after all,
affords each individual as much freedom as one can imagine short of
trampling on the comparable freedom of others. None- theless there is
a sense in which this concern arises, in particular, for some anarchist
critics—ironically so, given that parecon is basically an anarchistic
economic vision that eliminates fixed hierarchy and delivers self¬
management.

Still, for some anarchists the whole idea of institutions or even of
society itself is an irritant. Their justified and appropriate anger at
structures that subordinate most people's human potential to the elite
advantage of a few somehow extrapolates into the feeling that

institutions per se are oppressive. In this view, parecon is too social
precisely because it has institutions like councils and balanced job
complexes, with specific structures and roles. One either plays by
parecon's rules or suffers exclusion, they feel—which is true enough—
and they find this oppressive.

Such critics, in our opinions, overstate the extent to which we privilege
society. But beyond that, they feel that it is a mark of the
underdevelopment of human possibilities to have institutions at all. For
them, every encounter, every interaction, should be free of prior
assumptions, and thus there should be no lasting norms, rules, or
roles, but only spontaneous generation of always new and utterly free
relationships. For us, however, this is just taking the atomi- zation of
humanity to its ultimate debilitating conclusion and making believe
that the antisocial result is in fact wholesome.

Flumans are social. To fulfill functions, meet needs, and expand
possibilities, we interact and mesh our choices. We enhance what each
of us can contribute by interlinking what all of us undertake. It is true
that having lasting expectations about one another's activities in the
form of lasting social institutions can reveal a humanity that is not yet
freed—as in our subordination to markets, private ownership, or other
oppressive structures—but lasting social institutions can also reveal a
humanity meshing its individual and social sides seamlessly, to the
advantage of each. The solution to bad institutions is not no
institutions, but good institutions.

If parecon has institutions that enhance sociality, get needed functions
done, further preferred values, and uplift human possibilities, that's
good. If parecon instead narrows our options, that is not good. But that
there are institutions at all can't be taken as a sign of failing. It is,
instead, merely a sign that humans are present.

Parecon enlarges rather than restricts human possibilities. It rules out
the choice to be a wage slave, to have an unbalanced job complex,
and to wield disproportionate decision-making influence. But in doing
so parecon creates a context suitable to the freest and fullest
elaboration of each person's potentials and aspirations subject only to
the constraint that others enjoy the same range of possibilities.

20

Participatory?

Is Participatory Planning New, Or Is It Just Another Name
for a Mix of Markets and Central Planning?

In 1806 Pfuel had been one of those responsible for the plan of campaign that ended
in Jena and Auerstadt, but he did not see the least proof of the fallibility of his theory
in the disasters of that war. On the contrary, the deviations made from his theory
were, in his opinion, the sole cause of the whole disaster, and with characteristically
gleeful sarcasm he would remark, 'There, I said the whole affair would go to the
devil!' Pfuel was one of those theoreticians who so love their theory that they lose
sight of the theory's object—its practical application. His love of theory made him
hate everything practical, and he would not listen to it. He was even pleased by
failures, for failures resulting from deviations in practice from the theory only proved

to him the accuracy of his theory.

—Leo Tolstoy

Some critics say participatory planning is a system of exchange using
prices and equilibrating supply and demand. Doesn't that make it
largely a market and therefore subject to many ills that afflict markets?
Other critics ask, aren't parecon's facilitation workers just central
planners? Don't they disproportionately influence outcomes and won't
they bias results on their own behalf, thereby becoming a ruling
coordinator class?

The sentiments behind these complaints are very much in tune with
our own values and aims. It would be very disturbing, therefore, if the
claims themselves were accurate.

Market Allocation By Another Name?

It is certainly true that participatory planning has numeric indicators
that we call indicative prices and that people and institutions in a
parecon consult these indicative prices to make their decisions. And it
is also certainly true that the mix and match of the decisions that
people make in participatory planning come into accord, via a meshing
of supply and demand.

Some deduce from these facts that participatory planning must
therefore be a disguised market system. It turns out this is mostly a
matter of confused terminology, not substance.

If one means by market system, a system in which there are prices and
in which supply and demand come into accord during allocation, then,
yes, participatory planning would be a market system. But with that
definition, all non-trivial allocation systems would qualify as market

systems (even including central planning) and instead of markets
being a specific kind of allocation mechanism with its own particular
properties, the word market would be a synonym for allocation itself,
and we would need a new word for what economists more typically call
a market system.

When commentators use the term markets in that encompassing way,
it makes folks think that what we have in the US, Italy, India, Australia,
and Brazil ... is essentially inevitable. After all, any economy will value
items and try to avoid gluts or shortages by equilibrating supply and
demand in accord with its valuations. So any economy must employ
"markets," if they are so defined. The next step, of course, is to say
that we have markets, therefore there is no need for change. It is a
powerful sleight of hand, generating passivity in the face of
contemporary economic problems.

Suppose you looked at the Soviet Union some time back. You would
have seen the same thing that causes these critics to identify parecon
as some type of market system. Economic items in the old Soviet
Union had a price. Supply and demand came into proximity with each
other by a process that in large part took note of people's responses to
prices. So was the old Soviet economy a market system? Only if we
use a very misleading definition, of course.

Any economic system beyond personal barter includes some kind of
mechanism for people to compare options (some kind of prices,
perhaps accompanied, as in parecon, by qualitative information as
well). And if the economy isn't horribly wasteful, any such system will
also have supply and demand coming into proximity of one another, as
occurred in the old Soviet economy. But no one would mistake the old
Soviet economy for a market economy. Why?

Of course, it is because the old Soviet institutional framework and its
components, and in particular the allocation roles for each actor
established by those institutions, were quite different than those
promoted by what we call market exchange. In the old Soviet Union
the prices were ultimately set by central planners (who did, however,
consult people's reactions to those prices). The workers— through their
managers—had only to respond regarding their ability to fulfill
instructions and to convey information about avail- able resources, as
well as to obey instructions. The planners had only to calculate and set
prices and issue marching orders. Managers had to administer as well
as obey. Consumers had to go to the store and pick what they wanted,
paying the established price and keeping within their budget—
seemingly quite like at any supermarket. But there was no competition

among buyers and sellers leading to competitive prices which prices in
turn contoured the competition.

The point is that yes, parecon has, among other features, a kind of
budgeting, and a meshing of supply and demand, as does any complex
economy. But, nonetheless, parecon does not incorporate a market,
because, among other factors:

• Participatory planning doesn't have buyers and sellers
maximizing their own advantage each at the cost of the other.

• It doesn't have competitively determined prices.

• It doesn't have profit or surplus maximization.

• It doesn't have remuneration according to bargaining power or
output.

Rather, parecon has other features entirely contrary to these, as noted
throughout this volume. For example, it has far better estimates of true
social costs and benefits, and very different incentives and rewards,
different apportionment of influence over outcomes, and different
personality and preference implications, as discussed in prior
chapters.

The critic might not relent so fast. If participatory planning persists as
intended it is very different from markets, agrees the critic. But won't
market behavior intrude? Won't people pursue market exchanges for
personal advantage—black markets—until markets have subverted the
participatory planning process? Isn't parecon vulnerable to re-
emerging market allocation?

The logic of the complaint goes like this. Let's say that a country has a
parecon. A very skilled tailor finds that people appreciate his work and
that he can charge them for favors. The tailor does so, and soon the
tailor has made such a profit that he can employ other tailors to do his
work on a larger scale, benefitting from his special knowledge. After a
while the talented tailor has established an industry. With his profits,
his empire can freely expand. Markets and capitalism return.

Technically this is called a black market. One can imagine lots of
different approaches to this type of finagling in different participatory
economies. At the extremes:

• One society might decide that this is such a minuscule problem
that they will simply ignore it institutionally, letting normal
operations reduce it to a trivial annoyance, but taking no special
steps.

• Another society might take a diametrically opposite approach
and beyond allowing the barter of goods among actors, as in my
trading a shirt for a pair of gloves of yours, make transfers of
goods outside planned transactions illegal, including punishing
violators.

To decide which of these positions to favor, or something in between ...
one might want to take into account a few things.

1 The second part of the problem, hiring wage slaves with gains from
black marketeering, is simply not an option in parecon. At an absolute
minimum, the economy will not allocate resources to a production unit
assembled in such a fashion—not to mention, why would anyone work
there?

To test the above claim, let's make the problem more real. One
country goes parecon, another does not. A rich person from the latter
country comes into the parecon and advertises for wage slaves to work
in a factory that he wants to build in the parecon country. He offers a
high pay rate, let's say, using his assets from without. This cannot
happen, of course, but why not?

On the one hand, if you believe in parecon, you think most people will
look at this guy like he's the devil and want nothing to do with him. On
the other hand, what if some people, for whatever reasons, want to
give up balanced job complexes and remuneration according to effort
and sacrifice and proportionate impact on decisions and council
democracy and so on, for the better wages this owner offers? It still
cannot happen because society just doesn't allow it. The planning
process will not provide the newcomer's firm with inputs, and it will not
accept its outputs. (Even earlier, there is the matter of whether this
owner from abroad could possibly make big profits paying wages
sufficient to attract people away from parecon firms.)

2 But what about the first part of the problem: individuals benefiting
by selling their talents? For example suppose I have these wonderful
ornaments that I make in my spare time from road kill, or stuff I find in
the trash. (It cannot be made from inputs that I would have to get from
the economy because the economy will not provide such inputs for
profit-seeking.) Or, to make it more real ... I am a mind- bogglingly
good tennis player or pianist and I sell lessons on the sly. Why won't
this corrupt the system?

Well, it is correct that in a parecon this is technically possible, but it is
also important to realize that it is very hard in practice. For one thing,
you cannot transfer income—actual money—because (a) there is no

cash money to transfer and (b) even if there were, the black marketeer
could not enter the planning process to consume with it without
revealing, by its magnitude, that he/she was cheating the system. So
the black marketeer has to be paid in goods just as if he traded his
sweater for his neighbor's shoes, but in this case he or she would be
trading a service, like tennis lessons. It is very clumsy, to say the least,
and this puts a lid on the problem even without taking into account the
social onus. But if, in fact, the black marketeer manages to get people
to pay for lessons, how does she explain her resulting abundance? The
social ostracism that would accompany any ostentatious consumption
that revealed cheating (and what other source could their be for wildly
excessive consumption?) would be a very high price to pay for income
above and beyond the already quite comfortable and socially rich
existence parecon typically provides. And there is not only a social and
moral loss to be incurred by this type behavior in a parecon since
much consumption is collective, and that would be lost as well.

So even without legal penalties, on the one side there is great difficulty
in carrying off black market behavior and in accruing much by way of
it, and on the other side, there is considerable loss in being identified
as a social ingrate (which is almost impossible to avoid if you are
benefiting significantly).

Returning to the original social choice, believing all the above, one
might figure it is not worth society's time to worry about this problem
because it is easier to turn the other cheek and if some folks manage a
little extra lucre, so be it. Or one might decide, instead, that the
dangers are significant (like the dangers of outright theft, which is
outlawed) even with the social obstacles to such behavior, so that
society ought to police the matter. Or, perhaps, one might move from
the latter view to the former view as the system develops and as
parecon values become commonplace. In any event, there is not,
lurking here, a slippery slope back into markets.

Still, the persistent critic might wonder, is it right for a person to not
have the option—because society precludes it—to garner the highest
income possible by trading his/her talents?

This revisits points already addressed, but, of course if one thinks
people should be remunerated according to what they can extract via
their bargaining power—which is what markets foster—or according to
their contribution to output —as markets are supposed to achieve—
then one would not want parecon in the first place because it
remunerates according to effort and sacrifice. But if one does favor
remuneration for effort and sacrifice, then why should the existence of
societal restrictions be a debit? There is no such thing as "anything

goes" in any society. It cannot be anything goes for you and me when I
want to do X which precludes your doing Y and you want to do Y which
precludes my doing X. We cannot both implement our preferences
once my anything conflicts with your anything, so it is not possible to
say "anything goes."

More importantly, if we have institutions in a society—and there is no
society that doesn't have institutions—then by virtue of the roles the
institutions embody and those they do not embody, even before
considering laws and enforcement, there are restrictions.

For example, we do not allow slave-owning in the US. It is not
permitted. It doesn't matter if I come to you with a million dollars and
say sign here, be my slave—it is not legal. In fact, however, it is not
really an issue. The law is relatively moot because save for interstices
where one can operate without being visible, no one wants to be a
slave and no one wants slaves. The social opprobrium on both sides is
too great relative to the gains even for venal folks to attempt it. Now,
having wage slaves is another matter—that is acceptable and
therefore pursued with vigor and in fact taken as a given in capitalism.
But in a parecon, in contrast, having wage slaves is not an option. You
cannot be a part of a parecon as a wage slave or while employing a
wage slave. You would not get inputs and your outputs would not be
distributed. And trying to do it on the sly would be like trying to own a
slave in capitalism on the sly: unacceptable and unlikely to succeed to
any significant degree.

Parecon does not perfectly eliminate—whether by definition, by
incentives, or by consciousness-raising—every violation of its own
morals that someone might entertain. And so this question is an apt
form of a broader one—does parecon make most violations of its
values so counter productive as to be not worth pursuing even if one
could get away with it, and can it prosecute other violations when they
occur as successfully as any other model prosecutes violations?

Parecon's claim is that the answer is yes on both counts—actually
better than other systems on both counts. And if the next question is,
well, what about murder, theft, and other crimes—or what about the
black market if you decide to prosecute actors for that? Do these
require police, and if so won't that lead right back to old-fashioned
coercion and hierarchy? The answer is yes, a society with a parecon is
like any other society in that it has to deal with abuses of individuals
and of society, and yes that entails—in fact it defines—a "police
function." But no, this does not imply old-fashioned political coercion
and hierarchy any more than the fact that parecons have a "production
and allocation function" implies old-fashioned market or corporate-

based class division. But discussing how to accomplish police, judicial,
legislative, or other political functions is a matter for a presentation
about political vision outside the scope of this book, though it could be
pursued by a similar approach—settling on needed functions, worthy
values, and finally desired institutions.

Central Planning By Another Name?

The critic of participatory planning now takes an opposite approach.
Aren't the facilitators just central planners? Isn't this not really a new
system, but the same old authoritarian one, at least in practice?

The planning process, and thus the role of "facilitation boards" is,
remember, more or less like this. Each actor (which is sometimes an
individual, sometimes a workplace, or sometimes a consumption
council), submits a proposal for what they wish to consume or produce,
that is, their economic activity. The proposals of course do not mesh
into a workable plan immediately. For most goods more is sought for
consumption than proposed as supply even when people try to make
sensible proposals based on projections of the likely average income
for the coming period and awareness of their past period's actual
results. Demand is brought into touch with supply and vice versa by a
decentralized process of refining proposals in light of data from prior
rounds of proposals as well as technical data about capabilities and
other factors we have described.

Facilitation boards are, in this process, just workplaces like any others
in the economy. They include various tasks combined into balanced job
complexes. If the facilitation board's average job complex rating is
better than the average for society, people working in a facilitation
board have to work at sub-average options outside as well. If the
facilitation board job complex is worse than for the rest of society,
facilitation board workers have to work at better than average tasks
outside the board as well.

As to what a facilitation board does—there are different kinds, with
different purposes, but basically they either accumulate proposals and
information, prepare data for access by others, and with various
socially agreed-upon algorithms cull insights from data, passing back
into the process the resultant information, or they facilitate meeting
people's preferences, such as by helping people find new places to live
or work. And that's it. Facilitators make no decisions other than about
their own circumstances. What facilitators do can be checked by
anyone at any time since all information is freely available. Moreover,

virtually everything facilitators do could be largely and perhaps
completely automated— though in practice this would likely be
inefficient.

The critic hears all this and is not swayed. Surely you are starting to
imply a coordinator class, just by having people working in an
institution whose role is to decide who is affected by a certain decision
and to what degree, are you not?

To answer, one has to look further at the model, taking into account
what it does and doesn't address. The planning process has no need
for anyone to play the role the critic indicates and indeed explicitly
precludes it. The proportionate impacts on outcomes for different
actors emerge organically from their involvement at various levels of
the planning process and not from being decreed by some person or
group from above.

However, suppose such estimates did have to be made by someone
specially assigned to the task, which in fact they do not. That would
still not mean that there is a coordinator class in the economy any
more than the fact that there is a managerial function in many
industries in a parecon implies that there is a separate coordinator
class there, or the fact that there is an engineering function, or a
surgical function, or a need to have agencies that do calculations or
that summarize information means that folks involved in those
activities will be a separate and privileged class. It is not the existence
of important technical or conceptual tasks per se that engenders class
division, but rather how those tasks are distributed among the
populace.

If everyone has a balanced job complex, then no one has
disproportionately more empowering work than others. Moreover, if
there are no ways to make aggrandizing decisions to advance oneself
or one's class at the expense of others, then systematic abuse of even
temporary powers is virtually impossible. If your work group needs to
have a "conductor" and Leonard gets the nod next week, he can be
good or bad at it, and can even be a pompous ass or an exemplary
genius at it, but he cannot use the position to enrich himself or some
class of actors. That option doesn't exist because remuneration and
circumstances are beyond his or anyone else's capacity to privately
manipulate.

The critic is steadfast. Suppose I work in an institution that controls
some of the critical levers of the economy, she says. Then even if I
have a balanced job complex within that institution, I may still have an

unbalanced job complex with regard to economic power and the
broader community, right?

No, at least not in a parecon, because if you worked in the type of
institution just described, as part of your job complex you would have
to work part time elsewhere, to attain a balance.

But more important, which institution is it that the critic has in mind as
providing a base for abuse? And what advantages does it bestow upon
a worker there, such that he or she and others like him or her will
become a class with advantages to defend and expand?

The worry is valid in the abstract, of course, but then we have to look
to see whether in any particular kind of economy this problem exists in
practice. For example, if someone was a central planner in a centrally
planned economy, they would be able to bend and massage economic
outcomes to serve all planners and also all folks with relative
monopolies on decision-making power in workplaces by further
enlarging the advantages that such folks enjoy. They could accomplish
this by promoting investment patterns that enhanced information
centralization and thus further aggrandized coordinator class privilege,
not to mention by directly decreeing greater rewards for such folks. So
here the claim would be right. These individuals, by virtue of their
central planning positions, would have means to advance their
interests contrary to the interests of other actors. But, none of this
exists in a parecon.

Yes, there are boards or bureaus in a parecon that disseminate and
even summarize information, but there is no way for anyone working in
one of these boards (or doing other highly valued or conceptual
functions as a part of their balanced job complex, for that matter) to
benefit themselves, either in isolation or collectively, by doing anything
other than what is also in everyone else's interest—that is, by doing
their work as well as they can. For one thing any deviation would be
obvious. But, even more important, there could be no self-serving
deviation in ways that were not trivial, such as direct theft. It is
precisely this kind of attribute that is striking about parecon, in fact.

The idea behind this claim is pretty simple. In a parecon or really any
economy at all, to improve one's economic lot one needs more income
or better circumstances (or more power since that facilitates the other
two). But in a parecon everyone gets a share of income based on the
effort and sacrifice they expend in their work (or based on their need if
they cannot work) which means there is no way to gain more for
oneself or for a group other than by working harder or longer, which, in
fact, benefits everyone. For me to get ahead, the total product must

grow or I have to expend more effort and sacrifice in producing that
product, which is fair enough. I cannot get ahead at the expense of
others by grabbing a bigger share than I am entitled to and leaving
them with less than they are entitled to.

Similarly, since we all have balanced job complexes, my work situation
only improves if the society's average job complex improves so that
everyone's situation at work benefits. Yes, I can select from among
balanced job complexes one I prefer over one that doesn't suit me, and
of course I will do so and I should do so, but that has no broad class
implications and is as it should be for everyone.

Could a class of fakers arise who make believe that they cannot work,
who consume the average bundle, but who do not work the normal
load? It is hard to imagine, but more important than being far-fetched,
it would be a minimal achievement and they would not have any
authority over anyone, and since they would have to show all the signs
of a work-preventing ailment, on balance they would gain little, if
anything, at considerable risk.

At any rate, participatory planning is neither a market system nor a
centrally planned system precisely because it has different defining
institutions and roles than each and because in theory and also in
practice there is no tendency for it to devolve into either.

Chapter 21
Flexibility

Should A Parecon Incorporate Limited Markets

When we should have been planning switches to smaller, more fuel efficient, lighter
cars in the late 1960s, in response to a growing demand in the marketplace, GM
refused because "we make more money on big cars." It mattered not that customers
wanted the smaller cars, or that a national balance of payments deficit was being
built .... Refusal to enter the small car market when the profits were better on bigger
cars, despite the needs of the public and the national economy, was not an isolated

case of corporate insensitivity. It was typical.

— John DeLorean

The idea in this chapter is different than in the rest of our critical
chapters. The hypothetical critic in this chapter accepts that parecon is
a fine idea. She accepts that markets and central planning are horribly
flawed. She accepts the desirability of councils, balanced job

complexes, self-management decision- making norms and procedures,
and remuneration for effort and sacrifice. She accepts that
participatory planning fosters all those features and has additional
virtues as well, and she supports it for those reasons. But, even with all
that celebration, she worries about it being too doctrinaire.

Okay, markets for all our allocation is a horrible idea, but why not just
for some of it, she urges. Why not try to capture the benefits markets
have for those items where its benefits will be greatest and where we
can curtail accompanying debits? She claims markets are responsive.
They react to shocks quickly and they can update weekly, daily, or
even hourly. Participatory planning cannot re-plan repeatedly, she
says, so can't we therefore benefit by using markets to augment or
along with or even in place of pareconish approaches, at least for the
items where speed of reaction is needed?

In other words, can't we have a slightly mixed economy? Can't we take
the essence of participatory economics and strengthen it by adding
some limited attributes of other economies—in particular, some market
mediation of exchange? The critic continues, you have some product
that you know will have frequent innovation. When you plan it in the
participatory planning process at the outset of the year, you get a very
fine assessment of its true costs and benefits (or exchange value) at
the start of your year. The procedures support the economy's broad
values. They respect and foster self- management, and so on. But what
happens when innovations occur for the item in question well before
the next planning period comes around, say only two or three months
into the year?

I know the system handles modest typical preference changes fine,
says the critic, including those arising from changes in the product, but
what if there is a really large change because an innovation makes the
product really much better or perhaps due to a massive fire destroying
lots of production potential, and, as a result, many more people want
the product than planned to get it (well beyond what slack planning
can handle)? Wouldn't it be good to let the consumers and producers
of the item operate as they would via a market, so that the price would
move quickly and in the correct direction, and so that demand would
properly fall? Wouldn't this improve on having to replan the whole
economy?

Our answer to this very fair question comes in two parts.

First, if in such cases the only option was to persist with the plan as
conceived in the initial planning period or to incorporate market
features, we would favor the former. The loss in efficiency induced by

having to wait to adjust until the next planning period would be quite
modest compared to the debits of ushering market allocation back into
the system. The short of it is that moving quickly by markets from
wrong prices to still wrong prices by methods that subvert all the
values we hold dear is not improving matters.

But, second, this is not the actual situation. There is no reason why
parecon consumers should have to sit tight with the initially planned
exchange rates and allocations, rather than correct for surprising
innovations or calamities, even for large ones such as is hypothesized
here. To compare, suppose an innovation or a calamitous destruction
of productive potential occurs in a market economy. The conditions
prevailing have changed. Old prices no longer clear markets properly.
How do prices and material choices by actors respond?

With markets, buyers and sellers try to get as much benefit for
themselves, regardless of the effect on others, in the new situation,
just as in the old one. The market response, in other words, will likely
go in the right direction, but the motive driving the correction, as at all
times with markets, will be pursuit of profit/surplus and advance of
competing actors via enlarging market share. The process will ignore
the will of agents not directly involved in the exchange. It will impose
antisocial motives, and other failings, as we have discussed at length
about markets in general.

Additionally, the idea that markets respond well to shocks and changes
is, in any event, only a mathematician's assumption. In fact, the
rippling changes percolating from an unexpected major change in
demand or supply take time to unfold and the assertion that they will
inevitably occur quickly and accurately (even if we set aside other
reasons for market prices diverging from true costs and benefits and
market outputs diverging from accurate repre- sentations of people's
unbiased preferences) conveniently ignores a host of disequilibrating
dynamics that actually afflict market systems and that may mean that
the initial markets affected by the shock do not re-equilibrate quickly,
or at all; and/or that inter- actions between interconnected markets
produce a disequilibrating dynamic that pushes all markets farther
from a new equilibrium.

Thus re-equilibration in a market economy typically requires a change
in some initial market affected by the unforeseen event followed by
changes in any markets where supply or demand is affected by the
change in the first market, followed by changes in other markets where
supply and demand is affected by changes in the second tier affected,
and so on. How much of this re-equilibration takes place how quickly is
anybody's guess. Market enthusiasts assume it all happens very

quickly, and that market prices are good in the first place and good
after re-equilibration as well. Of course in reality only some of it
happens. None of it happens instantly. And worst, market prices
diverge from accurate valuations of true social costs and benefits both
before and after any shock. In sum, to the extent that re-equilibration
does not reach all markets, and to the extent that markets which do
eventually re-equilibrate do not do so instantaneously, market systems
will perform inefficiently and inequitably in response to the unforeseen
event even if its prices were efficient before and wound up efficient
after the shock. Of course, when its prices aren't efficient before and
don't wind up efficient afterward, things are that much worse.

For such reasons, we would not want to have some items handled by
market processes in a parecon even if it were an otherwise plausible
option, but more, we really could not sensibly do so even if we wanted
to. Having a little markets in a parecon is a bit like having a little
slavery in a democracy, though even less tenable. The logic of markets
invalidates the logic of participatory planning and of the whole
parecon, and it is also imperial, once it exists trying to spread as far
and wide as it can. You cannot have some workplaces seeking market
share, trying to induce purchases regardless of impact on consumers
and society, ignoring external effects, trying to elevate remuneration
according to power or output or surpluses, and expect those firms to
interface congenially with the rest of the participatory economy. So, in
contrast, if we have to live or die with it in full, what about
participatory planning's responsiveness?

Again an innovation occurs, this time in a parecon. The unforeseen
event significantly affects demands and valuations so that the original
plan—which was efficient and equitable before the shock—is no longer
efficient and equitable. The optimal solution, at least regarding the
choice of material inputs and outputs and their valuation and thus
distribution, is to redo the entire planning process and arrive at a new
plan perfectly efficient and equitable in light of the new conditions.
Doing so is in that sense the analog of a market system jumping from
allocations before the shock all the way to allocations after all of the
interconnected markets re- equilibrate, without any misallocations in
the interim. But wait says the critic, this answer won't do because re¬
planning is impractical except in cases of huge unforeseen events with
large enough impact to merit that big an undertaking, even if I will
admit that in such cases nothing would prevent redoing the plan—
which would be much simpler than planning from scratch. My point is,
says the critic, most of the time deviations are important yet not worth
cranking up the entire planning process involving all workers and
consumers councils, federations, and IFBs. To appease me regarding
parecon's flexibility, you need to have something more convenient,

even if a little less perfectly efficient and equitable, than entirely
replanning the whole economy.

In short, when a shock requires significant adjustments, how do we tide
over with appended alterations until the next scheduled planning
period fixes things "perfectly"—never more than 12 months away? The
answer is that different instances of parecon might have different
approaches to doing this. Here is one.

Workers in a parecon industry notice markedly changed demand or
valuations. Many more people than planned come to want some
product. The easiest adjustment is if the original plan allowed for
production of a certain amount extra of the good in question, so that
unexpected increased demand can be met by actualizing this extra
potential. The name for a plan with no extra potential built in is a "taut
plan," and the name for a plan with extra potential built in is a "slack
plan," with the amount of "slack" varying for the economy and its
industries. This is exactly analogous to business inventories in a
market system, whether kept on hand, or able to be generated.

But suppose workers notice that the increased demand will take them
beyond the available slack. As a result, they begin to contact
facilitation boards seeking extra workers and begin consulting
suppliers for additional inputs. If this can be had to the extent needed,
they report the results and the facilitation boards calculate the effect
on final prices. The predictions are made available to all consumers. If
assets for the desired production can't be had, supply won't rise
sufficiently and, instead, decisions will have to be made regarding
allocation of the limited available products. Of course all the usual
methods and motives of parecon operate at each step, whatever
specific approaches a particular parecon might employ.

Let's pick a simple unforseen event. An unprecedented warm spell
dramatically increases people's desires for air conditioners beyond
what was planned plus available slack.

An easy possibility is to ration the existing supply of air conditioners at
the level set by the original plan. This could be done in a variety of
ways. (1) Give everyone seeking air conditioners only X percent of the
what they they asked for, where X equates demand with available
supply. Of course, this is not possible for items that are not divisible.

So (2) give air conditioners only to those who asked for one in the
original plan and only in the quantity they asked for. Do not
accommodate new demanders or increased demands. But another
option is (3) raise the price of air conditioners until the excess demand
disappears, i.e. employ increased prices to ration air conditioners. In

this case we would have to have an IFB in place to adjust indicative
prices during the year. Or we could have the national consumer
federation and the national air conditioner industry federation make
the price adjustments. If we adjust the price of air conditioners to
eliminate the excess demand we have to charge users the higher price
or their demand will not fall to the existing level of supply. Those who
get the air conditioners and are charged the higher price now must
either reduce the amount of some other goods they consume—not
picking up all they ordered in their original plan—or they must increase
borrowing which is monitored in a participatory economy by their
consumer federation.

But of course as this example intentionally makes evident, a more
desirable adjustment to the unforeseen event would be increasing
production of air conditioners. We now know that more of society's
scarce productive resources should be devoted to air conditioners than
the original plan called for, and therefore by implication, less of
society's scarce productive resources should be devoted to producing
other goods and services. Adjusting production of air conditioners is in
this event more complicated than simply rationing the existing supply
in any of the above ways, but to do so also better meets real needs,
and is therefore more efficient.

The simplest way to increase production is to ask the air conditioner
federation to increase output via overtime. If the workers can produce
more by working more hours without needing significantly more inputs,
the only remaining issue is an equity matter—how much to
compensate them for their extra sacrifice. They will re-rate themselves
and presumably claim sacrifices equal to the extra hours plus extra
sacrifice they consider the after hours nature of their work to be. They
will produce more air conditioners credited to their firm's social benefit
to social cost ratio.

But what if more air conditioners cannot be produced without more
non-labor inputs which must be obtained from other workers'
federations? Then a fuller and more efficient mid-plan adjustment
requires renegotiation between the air conditioner federation and the
workers' federations who supply them. This is just the percolating and
spreading implication of a shock in an entwined economy, the same as
would occur were allocation handled by markets. But in all cases of all
involved parecon firms the choices about (1) rationing and (2)
adjusting production schedules, simply repeat themselves. How much
mid-term adjusting to do—rather than just waiting for the new planning
period to get inputs and outputs all "perfect" again; and then how
much of that mid-term adjusting to do simply by rationing, i.e.
adjusting consumption only; how much to by adjusting production of

the initial item affected and/or of other items that are inputs, etc.; and
which of the various options to use in any part of an adjustment,
including whether or not to recalibrate prices, are all practical issues to
be decided by those who work and consume in a participatory
economy following general norms and procedures applicable in specific
cases, though not via one single right norm or procedure that must be
followed always in all cases and in all parecons, we would guess.

In any event, there is no reason to think that the proliferating
adjustments in a participatory economy are any more difficult or
cumbersome than in market economies—unless one makes the
unrealistic assumption that markets adjust infinitely quickly to their
new equilibria. And so the overall difference from a market system is
increased rather than diminished flexibility, in that options can be
consciously chosen, the elimination of various (competitive) causes of
spiraling divergence from equilibrium, plus, of course, that the
procedure's guiding motives are social rather than profit seeking, the
valuations are accurate rather than distorted, and the influence of
actors is proportionate to the degree they are affected rather than
enormous for ruling classes and minuscule for subordinate classes.

Thus, with a large change in desirability of a product or some other
major shock in a parecon that goes beyond what slack can
accommodate, everyone who wants some affected good could be
supplied, or only those who originally placed orders could be, or only
those willing to pay a new higher price could be. In any of these
events, there would be some change in the real price, rising above or
falling below the planning period's indicative price. A parecon can
handle all these matters in numerous ways.

Indeed here is another angle from which to think of the whole
situation. Think in terms of the year's end. Suppose you got everything
you sought, exactly as you sought it. But suppose the total value
assessed at year's end was less than the total you allotted from your
budget—final prices for the year changed from planned prices so that
the total cost of all that you consumed was less in final fact than it was
in your initial planning. Then you would be entitled to a refund, or else
you would have unfairly lost out. Or suppose the total value of what
you consumed in final prices turned out higher than originally indicated
in planned prices. Then you would owe some, or would have received
more than you deserved. But parecon has no trouble correcting in
regard to either result. It can properly allot credit or debit to your
account.

The only difficulty in the above trivially simple approach is that you
would not have had a chance to reassess your choices based on the

accurate prices. But a parecon can meet this problem too. It need only
provide monthly updated price estimates based on the year's unfolding
patterns, so that you can, in fact, continually reassess your remaining
choices against slightly altering price projections. With slack and the
averaging of different consumers' choices, the amount of replanning
would likely be very modest.

The main point of all this, however, is that speed of response is not all
that much of a virtue in the first place, nor do markets possess as
much speed as people think, nor do they speedily arrive places where
people should knowingly wish to go in any event—and certainly that
speed of response should never be "bought" by incurring costs that
are way more damning than the modest gains achieved.

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22

Elevating Need?

Does Parecon Honor or Denigrate Need?

Reason, or the ratio of all we have already known, is not the same that it shall be

when we know more.
-William Blake

In a participatory economy remuneration is for effort expended and
sacrifice endured in work. Does this mistakenly reject providing
according to needs? Does it prevent needs from being properly met?
Does it elevate a self-interested calculus denying more social
motivations? Does it induce individualist rather than social inclinations?
Even supporters of parecon wonder about these questions. How do we
respond?

One issue is does parecon address the needs of people who cannot
work? Yes, parecon provides an average income to those who cannot

work. What about people with special health needs? Health care is a
free public good in a parecon. What about calamity victims? Insurance
is also a public good, so again parecon provides appropriately. What
about children? Do parents have to take less social product for
themselves in order to clothe, feed, and otherwise provide for children?
No, an average income goes to children, by right of being human.
Children do not have to work to get their fair share. Parecon
remunerates effort and sacrifice but that doesn't impede meeting
needs of those who cannot work because if you cannot work in a
parecon, you get an income anyhow. And if you have added health
needs, those are met as well.

But wondering about needs-based allocation might involve more subtle
matters. Suppose there is a severe cold snap in your region. Should
you have to pay for needed heat out of your income, thus leaving less
budget for desirable goods than you anticipated just because of bad
luck regarding the weather? Should bad weather diminish you budget
for getting goods to enhance your life? Or should the cost of heating to
withstand the cold snap be provided socially?

Ultimately, we are asking what counts as a health or a calamity
request handled outside one's budget—and what counts as our
responsibility within our budgets. No single answer universally applies.
Different countries could arrive at different norms. So could a single
country at different times or even different regions inside a country.
The self-managing choices of the polity and/or workers and consumers
councils decide. But it's plausible to predict that pareconish people will
have a bias. To the extent society can protect everyone against harsh
circumstances without abrogating other values and without incurring
undue expense and disruption, I would imagine pareconish people will
likely agree that adjustment policies should reduce any serious
suffering for external unforeseeable circumstances, not only in the
case of catastrophic calamity, but in lesser cases, as well. In any event,
that's my bias. It seems to me that there is no moral reason to allow
some people to fall victim to unpredictable but truly harmful bad luck,
while others relatively benefit. But this choice is not built into parecon
as an abiding norm in the way that balanced job complexes are built
in, for example, and different possibilities exist for how to try to fulfill
this aspiration and for the degree to seek to fulfill it, and these
differences will be explored differently in different cases, no doubt.

The critic worried about providing for needs may yet be unappeased.
His or her concerns may have a different logic. Isn't there something
wrong when an economy rewards our labors with remuneration rather
than simply giving us what we need by virtue of our being human?

Why do we have to earn a share? Why isn't a share ours by right? For

that matter, why do we need an incentive to work? Why do we need to
get a share of output for our labors, withheld if we don't do them,
rather than each of us working simply because it is our social
responsibility to do so—and getting whatever we need, simply by right
of our humanity?

The description sounds exalted, but imagine being ship-wrecked on an
island with fifty other folks. We have a lot of toys salvaged from our
ship. There is a beautiful swimming area. There are games to be
played, music to be performed and heard, relationships to explore,
poetry to write, nature to experience, and so on. There is also,
however, a need to build housing, grow and harvest food, pot fresh
water, maintain single fires, and so on. So there is hard, boring labor,
and there is fun and enriched leisure time.

Suppose I announce that I need a dwelling, fresh water, food, a
luxurious carved flute, and some newly made clothes. My hap- piness,
sanity, and fulfillment depend on having all that, I say. I need it. But I
also announce that I would rather not work producing that stuff or
anything else. I enjoy swimming and hanging out too much to give
time to anything more onerous each day. I need a lot of leisure. That is
just me.

Does anyone seriously think my announcements should be honored?
But what else does it mean to say that I ought to get what I need
regardless than that these announcements are acceptable? If it means,
as I suspect it always does, sure, you get what you need, but you have
to work the fair amount for it, and what you need isn't what you say it
is but instead what society somehow agrees on in context of what you
say, then the phrase "getting what you need unconnected to labor" is
misleading rhetoric.

In practice, moreover, in addition to being utopian regarding the
amount of output available—we cannot all get all that we want and
isn't what we want in fact what we need?—rewarding need without
labor (for those who can work) is actually not equitable at all. And if
the assumption is that we will behave to make it equitable, how do we
do that without an allocation mechanism which tells us what is a fair
amount to work and consume? Likewise, even if I do a fair share of
work, should I be able to say I need more than my correlated fair share
of food or housing or carved musical instruments just because I
determine that it would make me happier? If that is not my unilateral
right, then how is appropriate need assessed?

The answer should be that a social process decides what is
appropriate, with each actor having proportionate input, and with the

decision made in light of an accurate understanding of the full social
costs and benefits of the creation and utilization of each product,
including of the labor involved. This, of course, is precisely what
parecon delivers by accounting for time and effort in production as well
as the value of outputs and processes. The point is, for an economy to
respect the needs of each actor in the same degree as it respects the
needs of all other actors requires that the economy arrive at proper
valuations of full social costs and benefits of work and its inputs and
outputs and that it apportion shares of output in accord with effort and
sacrifice expended, with allowance, of course, for special cases of the
sort noted earlier.

So it is precisely because parecon is geared to meet needs and
develop potentials that parecon remunerates as it does, determines
values as it does, and involves actors in decisions and apportions work
responsibilities as it does. If we break the relation between work and
income we eliminate the possibility of people knowing what is greedy
and what is appropriate, even assuming everyone wants to abide such
guides spontaneously, and also of knowing the direction people wish
the economy to go in.

And there is another point to be made. A critic may worry that
remunerating effort and sacrifice rather than providing for needs
irrespective of work will propel actors to seek personal income rather
than care about one another. But, in fact, as we have seen, parecon
creates a context in which to get ahead personally, even someone who
starts out quite self-interested, greedy, and dismissive of the needs of
others, has no choice but to address the needs of others. In a parecon
we enjoy improved work conditions if society's average job complex
improves, which means we must favor not all changes in our own work
place, irrespective of impact outside, but only changes in the whole
economy that make the largest gains in quality of life implications of
work, even if none of those changes are situated in our own workplace.
And the amount we get per hour of average labor at average intensity
goes up, likewise, if the whole social product goes up, again imposing
on actors attentiveness to society and not just self.

Ironically, therefore, it turns out that giving people what they declare
they need with no attention to their participation in production does far
less to produce social concern and mutual awareness than rewarding
effort and sacrifice, since the former says we need only concern
ourselves with assessing our own desires in determining what we want
and receiving it, while the later requires that we pay attention to the
well-being of the whole community even if we are solely interested in
advancing our own well-being. That is, giving people from the social
product simply for what they proclaim to be their needs promotes an

individualistic, anti-social calculus in everyone, whereas rewarding
effort and sacrifice and operating via participatory planning from within
balanced job complexes literally requires that we pay attention to the
entire social condition, including the situations, needs, and possibilities
of others.

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Chapter 23
Compatibility

Can a Parecon Accommodate and Be
Accommodated By Other Institutions?

I wish that every human life might be pure transparent freedom.

— Simone De Beauvoir

My notion of democracy is that under it the weakest shall have the same
opportunities as the strongest ... no country in the world today shows any but
patronizing regard for the weak ... Western democracy, as it functions today, is
diluted fascism ... true democracy cannot be worked by twenty men sitting at the
center. It has to be worked from below, by the people of every village.

— Gandhi

Humans are social beings and we do not live by bread alone.
Economics is neither the sole nor even the sole centrally important
aspect of life. It is critical, but so are culture, politics, kinship, ecology,
and international relations. The good society we aspire to will have a
transformed economy but very likely also transformed kinship, polity,
and cultural relations, transformed relations with nature, and
transformed relations among societies.

In fact, what makes some part of social life central? The answer is that
it depends on your purpose. Central relative to what? We are
interested in changing society for the better. So our question is, what

makes some domain of society central to the effort to change society
for the better?

One answer is that centrally important means (a) providing pervasively
influential pressures on the way society is and the way it could be, and
(b) impacting broad constituencies so that they can potentially act in
light of their aims to try to make desirable changes. The economy does
this, of course, by defining how we produce, consume, and allocate
and by exerting pressure on other areas of our lives via its impact on
these other functions and by demarcating us into the capitalist,
coordinator, and working classes, which, by virtue of the different roles
they play in economic and social life can both perceive the economy's
importance and also develop interests and agendas to perpetuate or to
change its features. But the polity also does all this, though with
respect to adjudication, legislation, and the implementation and
enforcement of shared programs. And what we might call kinship also
does it, regarding procreation, nurturance, socialization, and other
func- tions related to the creation and emergence of each new
generation. And the culture does it as well, regarding the way
communities define their mutual relations, celebrations, and broad
identities.

Each of these four realms of social interaction defines centrally
important features in societies and demarcates conflicting social
groups, and each sphere can generate movements seeking new
structures critical to the definition of a new society. So all are central,
not only one or another, not only economics. But if a good society is
one where all these domains emanate liberating influences, is a
parecon compatible with a positive vision we may adopt for other
spheres of social life? Does it emanate pressures that will foster their
logic? Do they emanate pressures that will foster parecon's logic? If
not, can parecon be modified by tweaking it without losing its benefits
or undercutting its operations?

This question can only be answered definitively by setting forth visions
for other spheres and evaluating the interrelations. We know,
obviously, that many models for other spheres would conflict with a
parecon—for example those that would involve hierarchies of privilege
or restrictions on freedom, including those with racist cultures, sexist
kinship relations, and authoritarian politics, or, for that matter,
relations to ecology denying human well being and development, and
relations among nations contrary to equity, diversity, solidarity, and
self-management. Institutions existing alongside a parecon will have to
respect balanced job complexes, remuneration for effort and sacrifice,
and self-management and to the degree that they need inputs and
render outputs, will have to interface with participatory planning. A

parecon, operating alongside other domains of life, will likewise have
to respect and mesh with their operations.

The idea is relatively simple. Major institutions in society have roles
that people fill and that in turn influence people's beliefs, aspirations,
and expectations. You cannot have people propelled toward type "a"
beliefs, desires, and expectations in one major part of their lives, and
toward type "b" beliefs, expectations, and desires in another major
part of their lives when the implications of "a” and "b" are strongly at
odds. For an obvious case, you cannot have home lives or educational
systems producing new recruits for a parecon who lack the confidence
and learning to participate in it, nor, for that matter, can you have
homes or schooling producing new recruits for a capitalist economy
that have too much confidence and learning to accept the subordinate
roles they will play in it. And vice versa, you can't have an economy
producing hierarchies and expectations in men and women, or in
people of different races and cultural communities, or in citizens
playing various roles in the polity, that are contrary to what the
kinship, cultural, and political institutions of society require to
function.

So are the people parecon presents to the rest of society the kind of
people who will be compatible with and thrive in institutions designed
to eliminate racism, sexism, heterosexism, political authoritarianism,
environmental degradation, and global imper- ialism? Models for such
institutions still await development, but we believe that we can
provisionally answer this question in the affirmative, given that people
in parecon feel solidarity, are used to participation, expect and seek
equity, have practice with and value self-management, and anticipate
and appreciate diversity.

Chapter 24
Human Nature

What About Jaundiced Humanity?

"Incapacity of the masses." What a tool for all exploiters and dominators, past
present and future, and especially for the modern aspiring enslavers, whatever their
insignia ... Nazism, Bolshevism, Fascism, or Communism. "Incapacity of the masses."
This is a point on which reactionaries of all colors are in perfect agreement... and this

agreement is exceedingly significant.

—Voline

Some critics of parecon base their objection on the grounds of human
nature. "A better economy? Don't be silly. Human nature precludes it.
Humans are greedy, avaricious, self-seeking, consumerist,
individualist, antisocial, authoritarian, order-givers and takers. You
cannot build a house out of sand. Neither can you build a utopia out of
humans. We lack the right stuff."

The claim that "humans are rotten" may be a rationalization that
hypocritically propels self-interest or it may be truly believed. In either
event, it operates with great power.

When I was a college student at MIT in the class of 1969, I was very
active in the anti-war movement. As part of my organizing efforts I
spoke to a great many students, sometimes one-on-one, often in large
groups. Discussions would go on long into the night.

The mood would be very intense since, after all, these folks took school
very seriously and not only were matters of great social consequence
on the agenda, but also such matters as whether they would have
classes to go to or classes would be shut down. In these meetings I
would refute misgivings and misconceptions about the anti-war
movement's view of history and society, one after another, but for
many folks these facts were actually secondary, a kind of red herring.
The rock-bottom line of defense against having to commit to stopping
the war in Indochina was, for most, a variation on one theme. Finally,
someone would express this argument explicitly: "Why bother
opposing it? Even if we were to curtail this war, there would just be
another one. Even if we reduced, temporarily, the destruction,
massacre, and indignity, these would return and make up for lost time.
That is the nature of humanity." The speaker would continue: "People
are greedy violent animals, so what more can you expect? Let me go
back to my classes, let me avoid all this distraction. Stop berating me
with it. There is nothing I or anyone can do. Human nature sucks."

I think this was then and is still now a bedrock logic of both repression
and capitulation. It is hammered into our every pore from every
direction for a good part of our lives. How does an advocate not only of
ending a war or some other atrocity, but of attaining a just world, rebut
such cynical views?

The short answer I like to give I first heard from Noam Chomsky.
Imagine you are in an upstairs window looking out over a nearly empty
street below. It is a scorching hot day. A child below is enjoying an ice
cream cone. Up walks a man. He looks down, grabs the cone, and
swats the child aside into the gutter. He walks on enjoying his new
cone. What do you think, from the safety of your distance from the

scene, about this man? Of course, you think this fellow is pathological.
You certainly don't identify with him and think, that's me down there, I
would do that too. Instead you would be horrified and you would likely
even rush down to comfort the child. But why?

If humans are greedy, self-centered, violent animals wouldn't we
expect that all humans, confronted with the opportunity to take a
delicious morsel at no cost to themselves, would do so? Why should it
horrify us when we see someone do it? Why should we find it
pathological? The answer is that we actually do not think that people
are innately thugs. We only gravitate to that claim when it serves our
purposes to rationalize some agenda we hold for other reasons
entirely, such as when we ignore widespread injustice because to do
otherwise would be uncomfortable, costly, and even risky.

For my second answer, I ask an advocate of the view that "humans
suck" to consider from personal experience if there is some exception
to this otherwise general rule. Do you suck, I ask? Are you greedy and
avaricious, concerned only for yourself? If you are, okay, but do you
know anyone who isn't? Some relative, an acquaintance, a hero from
history, anyone? Just one such person? And then I ask, how did this one
social rather than antisocial person arrive at their concern for and
solidarity with others?

To confused stares I say, well, think about it. We live in a world with
institutions that propel greediness and self-centered calculation. The
messages all around us foster these antisocial attitudes rather than
countering them. It is easy to explain selfishness arising in us in this
context. In our world selfishness is the way to get ahead and we even
often get punished in our own lives if we care so much about others
that it diverts us from personal advancement. Indeed, it is easy to
explain even gross proportions of greed and narrow individualism in
our world. After all, if we merely have the capacity to drift in that
direction, then given our environments, there is no surprise that we will
do so, some of us more than others. But what about the one person
you have conjured into mind, or the millions I can think of, almost
everyone in various parts of their lives, who displays more social and
empathetic behavior? From where do their mutually supportive acts
and feelings arise? If people suck as you say, and they suck due to a
wired-in disposition that we cannot hope to transcend even to the
degree of ending war and starvation, then these better attributes
should not exist at all, and if they happened to accidentally arise in
some modest dose, surely they would be buried out of existence by the
overwhelming pressures of our circumstances. Therefore for social
caring to be as prevalent as it is—and in truth, we know it is very

widespread—perhaps it is the trait that is wired-in, rather than its
opposite.

This argument begins not with a look at human nature itself, as if we
could peer down and see the immensely complex implications of our
genes, but from a look at what human nature must embody to get the
outcomes we see in the context of the antisocial structures we endure.
Your good niece or grandmother, the good person in history, and the
good inclinations you yourself have, all these could not possibly have
emerged if the view that we are innately horrible is correct. Innate evil
plus surrounding institutions stifling sociality and enlarging greed
would not yield even one good grandma.

The long answer is different—more erudite, but ultimately no more
conclusive than what goes above. It rebuts social Darwinism,
discussing the actual logic of inheritance, evolution, and so on. It rarely
has any real bearing on why people hold the views they do, because
people decrying human nature as abysmal rarely if ever are doing so
due to actual views about the mechanics of the evolution of human
nature. At any rate, we know so little about such matters that in fact
there is no conclusive scientific argument about human nature,
starting at the genes. We know from experience that human nature is
such that greed and violence and worse can emerge from human
beings. After all, we have all seen this, or know of it, for ourselves. We
also know that human nature is such that love and loyalty and respect
and caring can emerge from human beings. The cynic says there is too
much disposition toward the former for any institutional structure to
prevent the baser tendencies from emerging and dominating. One
thug with a club can wreak havoc, forcing others, even against their
inclinations, to wield clubs in return. This is not an entirely crazy fear,
though it is hard to understand why it leads the cynic to favor
institutions that virtually compel people to pick up clubs. The optimist
says that given circumstances that foster and reward their better
selves, humans can engage in mutually beneficial social relations with
means for handling what little violence and anti-sociality arise in the
normal order of events, and without tumbling down a slippery slope of
greed or destruction. We urge this, and provide parecon as a set of
relevant economic structures. So who is right?

One important answer to offer the cynic is that since we do not know
for certain who is right, why are you betting on the depressing
outcome being the case? How can you not favor acting on the
possibility that we can develop institutions which would foster the best
in us, and in the context of which, therefore, we would be social and
caring and the horrible artifacts of competition and self-centered
violence would be eliminated? Why are you betting against the efficacy

of having institutions which less aggressively promote self-
centeredness and greed, much less foster their opposite?

The answer the cynic offers is generally, "but they tried that, in Russia,
in China, and so on, and it failed horribly. Out with the old boss, in with
the new. Out with the old horrible outcomes, in with new ones, as bad
or worse. You cannot do it."

The activist reply has got to be, yes, what you say about those
historical efforts not yielding a truly just and equitable new society is
the case, but what was implemented was not, in fact, new institutions
fostering the best in us. It was, instead, new institutions still fostering
antisocial outcomes, class divisions, and all the old crap, as the saying
goes. It doesn't prove that we cannot have desirable social structures
that institutions with predictably horrible implications—Leninist political
structures, central planning apparatuses, etc.—had the expected
horrible effects.

Yes, you are correct that if we institute structures like those of parecon
and if, against the socializing pressures of these new institutions,
people still en masse strive to subjugate and oppress one another in
ways that subvert equity and justice, you will then have a real
argument for the impossibility of these goals. But until then, it is
nothing but unfounded cynicism.

Another way to put this is to ask folks, who do you want to be right?
When a cynic rebuts desires for a better world by claiming human
nature precludes it, it always seems that he or she really wants it to be
the case that people are innately evil. The cynic's whole manner, their
demeanor in the discussion, their advocacy, and their stubborn refusal
to even consider other possibilities, all reveal a disposition to want
their claims to be true—and I ask them, how can this possibly be? Why,

I wonder, do you have a vested interest in being right about human
nature precluding sociality? Why don't you weep over your belief, if, as
you say, you think it means we will have murders and wars and
hierarchies of hunger until the end of time? What can it be about this
belief being right that so rewards you that you actually want it to be
the case? And could it be that whatever benefit you enjoy from the
belief is what makes you feel as you do?

Of, course, what I have in mind is what Voline addressed in the
quotation opening this chapter—the need to rationalize injustice,
whether to enjoy its fruits without remorse, or to avoid remorse over
being immobilized by fearing the consequences of battling it.

Chapter 25
Asset or Debit?

Does Vision Produce Sectarianism?

One cannot escape the feeling that these equations have an existence and
intelligence of their own, that they are wiser than we are, wiser even than their
discoverers, that we get more out of them than was originally put into them.

—Heinrich Hertz

There is a surprisingly prevalent type of criticism of economic vision as
extensive as parecon that we have yet to address. It doesn't charge
that parecon is unable to meet human needs by reason of poor
incentives, or impossible requirements, or anything else explicitly
identified. Quite the contrary, it finds no fault on this score. And it
doesn't charge that parecon is deficient because despite being able to
effectively accomplish economic functions, parecon subverts values
that we aspire to, whether by accidental omission or willfully. Quite the
opposite, this criticism praises the values and sometimes even the
structures of parecon. This critical response resists aggressively
advocating parecon, in fact, precisely because parecon has every
appearance of being an economically and socially positive vision.
Parecon is resisted, that is, because it appears to be so good. How can
this be?

Any kind of vision, these critics claim, is detrimental to improving
society, because however wonderful it may seem vision is never truly
perfect and also because vision inevitably leads to closed-minded
sectarianism, which entrenches its faults. These critics argue as
follows.

• First, society and people are too complex to perfectly predict.
Thus, in some fashion all efforts to project future institutions,
however insightful, must fall short of optimal and be flawed
compared to what would be ideal. Experience is the only
corrective, and to have instructive experience requires
experimenting and evaluating practical results, step by step,
without prejudging possible destinations. We should not adopt a
full vision until we implement one. Preconception of a full

institutional vision, rather than just of clear values, overextends
our capacities.

• Second, in espousing a set of institutional aims and trying to get
people to share them, people will inevitably become invested in
those aims. Identities will become wrapped up in their
worthiness. Energies will go to defending them irres- pective of
actual logic and evidence. Inflexibility will set in. Arrogance will
arise. Advocates of fully formulated institu- tional vision will lose
the ability to learn and will begin to mechanically impose their
aims even on the supposed beneficiaries of vision. Little
attention will go to alteration, improvement, addition, or
reconstruction, as compared to if we were guided by practice
alone, not preconceived vision.

These critics of preconceived vision conclude that the right way to
attain vision is through the experience of everyone experimenting,
without detailed pre-envisioning and without sectarianism- inducing
espousal of compelling, encompassing aims, and without efforts to get
widespread shared agreement. We should say only very general things
about what we want—such as that the future should be just, equitable,
reduce hierarchy, and so on.

We agree that error and sectarianism are both possible faults. But how
should we respond to these insights? Consider two opposed
approaches.

The first approach employs what ecologists call the "pre- cautionary
principle," which says that in the face of uncertainty and inevitable
human subjectivity, we should be aware of our limitations and should
act very cautiously to minimize tendencies toward negative
consequences.

The second approach we call the "red-light principle." It says because
of uncertainty and possible sectarianism, we should stop any attempt
to pre-envision the future. We should not develop and share full and
compelling vision like that put forth in this book, whether for
economics or for any other sphere of social life, because such vision
will not serve as an aid to moving forward, but as an obstacle.

I believe the precautionary principle is far more appropriate than the
red-light principle.

For one thing, before stopping the pursuit of compelling vision, we
ought to understand the cost of doing so.

Suppose a movement obeys the red light principle and chooses to
forego a widely shared compelling vision that reveals how new defining
institutions would operate, why they would get their assigned tasks
completed, and why they would yield vastly superior outcomes than
current institutions.

First, this movement will not have a good notion about what
experiments to undertake to learn as it proceeds. Just as scientists
need theoretical frameworks to guide their choice of experiment, so
too political activists need overarching vision to guide their choice of
social experiment.

Second, lacking widely shared vision to inspire membership, generate
hope, sustain commitment, and provide coherence and identity, the
red-light movement will not have a sufficiently wide base of
membership and participation to grow beyond a small scale.

Third, lacking a widely shared compelling vision will not mean there
will be no such visions operating on the left. Quite the contrary, those
who don't care at all even about the precautionary principle will still
develop and employ vision, most likely with market coordinatorist
values and aspirations, which will then guide (and limit) experiments in
new relations as well as strategies for winning change. There will not
be an absence of vision if those attuned to not overreaching our
experiential and conceptual bounds and to not being sectarian entirely
eschew vision, but instead there will be a vision developed and held by
narrow elites who don't have such concerns. So the movement that
doesn't seek shared public vision will either fail to inspire support
sufficient to win significant gains (which is our prediction), or if it does
inspire such support, it will implement a narrowly held vision contrary
to all but elite aspirations.

So yes, inaccurate prediction and sectarian attachment to vision are
indeed possible problems of pursuing shared vision. But we believe
that stop-light advocates have chosen the wrong solution to averting
these problems: namely, dismissing serious and compelling
institutional vision entirely. This "solution" repeats a more common
mistake that operates in many venues. Here are two related
examples:

• Someone sees that technologies, medicine, and science can
oppress people. Their proposed solution: dump technology,
medicine, and science.

• Someone sees that many reforms in practice coopt dissent and
legitimate existing oppressive structures. Their proposed
solution: dump reforms.

In these cases, as with vision, there is an unwarranted leap from
justified precaution to red-light debilitation. A true critical
characterization of some instances of technology, science, medicine,
reforms, or (in our case) seeking vision, wrongly extrapolates into a
rejection of these things outright.

Of course many technologies are oppressive, including destructive
weapons, pollution-generating cars, and alienating and disempowering
assembly lines, not to mention nuclear or biological weapons. But
these are not the only technologies we have, and there are other
technologies that are positive- shoelaces, cooking utensils, aspirin,
eyeglasses, solar generators. The whole category— technology—isn't,
in fact, infected. Moreover, the reason that many technologies are
oppressive isn't that there is something intrinsically harmful in creating
innovations of design that incorporate knowledge of laws of nature.
Rather, the harm arises from social relations that create sectors of
people able to produce and use technologies to harm some
constituencies to the advantage of others. More, the choice to do
without technologies is even worse than the problem of having many
defective ones. If implemented, it would plunge us into a range of
suffering that would be unfathomable. What ought to be ruled out is
therefore not tech- nologies (or medicine or science) perse, but
oppressive technologies (medicine and science), and what ought to be
sought is ever more effective means of producing desirable
technologies while guarding against their misuse as well as against the
harmful elitist trajectories imposed on technology creation and use.
Following the precautionary principle in this case, in other words,
doesn't lead us to suicidally reject all technologies but to carefully
pursue desired technologies so as to maximize positive effects and
avoid ill effects. Yes, of course we should have humility before the
complexity of technology. But we should not have so much humility
that we entirely cut off our capacities to innovate. Paralysis is not
progress.

Consider now the example of reforms. Sure a reform's
accomplishments can be insufficient to warrant the effort expended to
win it. And certainly a reform's desirable consequences can be
outweighed by the extent to which it dulls dissent or ratifies existing
oppressive structures, or by intended or even unintended negative
consequences. But to notice these potential problems and in response
rule out reforms per se would mean ruling out all changes that fall
short of entirely transforming social relations. It would mean not
fighting against unjust wars, not seeking better wages, not trying to
gain more power for grassroots constituencies and their organizations,
and not attempting to diminish racist or sexist relations, and in these

ways, it would lead to becoming a callous movement that ignores
immediate suffering and therefore deserves little support.

So the problem is not reforms perse, but pursuing reforms as the best
gains that we can possibly hope for and thus in ways that presuppose
maintaining underlying injustices. The problem is not reforms, that is,
but reformism. And the alternative to reformism is not to dump all
reforms (following the red-light principle), but to fight for reforms in
ways that not only seek worthy immediate gains, but increase
movement membership, deepen movement commitment, enrich
movement understanding, develop movement infra- structure, and in
short, create preconditions for winning still more gains and ultimately
fundamental change.

The above examples may seem a needless digression, but I suspect
that those who reject technology, those who reject all reforms, and
those who reject compelling institutional vision are all making
essentially the same error. A real problem is rightly identified. In the
case of vision the problem is that we can have incomplete, inadequate,
or wrong vision and we can misuse desirable vision. But it is wrong to
propose as a solution that we dump vision. We should abide the
precautionary principle by trying to develop and employ vision well,
not put up a red light.

So how can we make serious, compelling, shared institutional vision an
asset rather than a debit? We can work to ensure:

1 That vision illuminates the new society's defining features but does
not overstep into utopian wish fulfillment or pursue details that
transcend what we can reasonably imagine.

2 That vision is accessible and becomes widely known, understood,
and publicly shared, so that vision's creation, dispersal, and use is
itself a participatory phenomenon fostering a growing movement of
informed, careful, and always learning advocates.

3 That vision is debated, dissected, refined, and improved as thought
and experience permit. That is, it is not statically defended, but instead
steadily enriched. Vision is not seen as an end point, but as a source
for continuing creation, innovation, experiment, and development.

4 That flexible, evolving, and enlarging vision is rooted in careful
thought and experience and helps guide current programs so that our
contemporary efforts lead toward what we desire for the future.

In this book we have sought to pose a particular vision clearly and
accessibly, based as best we could not only on our own logic and
experience, but on that which has accumulated during the history of
leftist struggles in past decades. We have tried to respect the
limitations of social prediction and the dangers of dogmatism by
promoting a critical, evaluative, experimental, and open process. But
as to the future trajectory of pareconish vision, there is a little ditty
that applies nicely:

The viewer paints the picture,

The reader writes the book,

The glutton gives the tart its taste,

And not the pastry cook.

Put differently, the implications of a vision depend ultimately on
movement responses. It is not books that will determine how vision is
used, but those who read books and extend, alter, apply, and utilize
their offerings.

Chapter 26

Excitement / Attainability

Can We Have A Parecon, Or Is History Forever Capitalist?

I see in the near future a crisis approaching that unnerves me and causes me to
tremble for the safety of my country ... corporations have been enthroned and an era
of corruption in high places will follow, and the money of the country will endeavor to
prolong its reign by working upon the prejudices of the people until all wealth is
aggregated in a few hands and the Republic is destroyed. I feel at this moment more
anxiety for the safety of my country than ever before, even in the midst of war.

—Abraham Lincoln

Is participatory economics exciting enough to attract abiding support?
Are conditions bequeathed to us by past history conducive to allowing
us to win against existing obstacles and thereby attain participatory
economics?

Excitement

Lacking "excitement" may seem like an odd criticism, but from an
activist standpoint, it is not. It is not enough that goals posited for our
future be desirable or even wonderful. They must also attract support.

If not, they will exist on paper, but not in deeds. Words that lack
excitement might inform or brighten the lives of a few who study them,
but they are unlikely to transform the lives of all those who work and
consume (or of all those who nurture the next generation, who teach or
learn, who celebrate and identify, or who create laws, who adjudicate
disputes).

Yes, parecon is a good model if it is a wonderful economy: viable and
desirable. It is a good social vision, however, only if it is a good model
and also attractive to widespread and growing constituencies. This is
the "excitement" factor. But if parecon is viable and desirable, then
the excitement factor is overwhelmingly a matter of how parecon is
communicated. Its contents are certainly consistent with the possibility
of exciting expression. More justice is more inspiring than less justice.
More democracy is more inspiring than less democracy. More equity,
diversity, and self-management are more inspiring than less equity,
diversity, and self-management. The particular words one person uses
to talk about parecon may not be overly inspiring—something of which
I may be guilty. But the solution to that is for others to do better both
in further refining and improving the model, and especially in
conveying that it is a worthy practical vision and making it so.

Attainability

What about attainability? Is parecon an attainable aspiration for the
populations of countries like the United States, Brazil, Italy, Venezuela,
Greece, England, Australia, Russia, Mexico, France, India, Indonesia,
South Africa, Argentina, Haiti, and Japan, etc.?

Normal citizens feel two very important obstacles to under- taking
social change efforts:

1 The fear that even if they were to win a new world, it would turn
out to be just like the old world—or worse.

2 The doubt that they could ever do anything that would win a new
world.

This book directly addresses point (1), at least regarding economics. It
argues that if we manage to attain a parecon it will be vastly superior
to capitalism and it will not devolve or degenerate back into the
oppressive modes we now know, but will instead prosper and evolve
positively, consistent with its guiding values. The model is thus viable
and worthy. Attaining it would be worth it.

But can we attain it? This is a very different question. Ultimately the
only proof is to succeed. Short of that the only argument for its
possibility is:

1 Recognition that what humanity creates humanity can transcend—
feudalism was not forever, slavery was not forever, neither capitalism
nor coordinatorism will be forever.

2 Recognition that elements of parecon have already been
implemented successfully. At www.parecon.org there are links to
organizations that have explicitly implemented pieces of the parecon
vision in their practice as well as accounts of those efforts, further
discussion of the model, and considerable strategic discussion, as well.
For that matter, our own daily lives are full of aspects of the norms and
even the logic of parecon which we cling to obstinately with our better
selves against the pressures of the societies we endure.

3 A presentation of a broad set of strategic guidelines, aims,
programs, structures, and steps, each of which can evidently be
accomplished and which all together reveal a scenario that could end
in a participatory economy. Regarding strategic demands and efforts
that could accumulate into a process attaining a parecon, we cannot
undertake such a discussion here, but in Moving Forward (AK Press,
2001), elements of that discussion are the primary focus.

Still, if the proof is ultimately only in the practice, the confidence to
even try to attain participatory economic goals that comes from faith in
human progress, from experience of expanding successes, and from
consciousness of plausible scenarios of change depends first on more
people entering the camp of those advocating parecon and trying to
make it a reality. This book is obviously an effort to help propel that
process.

Brief Bibliography

Titles by the author,
titles referenced in Parecon,
and selected titles of special interest

Books by Michael Albert

• Trajectory of Change (South End Press, 2002)

• Thought Dreams (Arbeiter Ring Press, 2002)

• Moving Forward (AK Press, 2000)

• Thinking Forward (AR, 2000)

• Stop The Killing Train (SEP, 1994)

• What Is To Be Undone? (Porter Sargent, 1974)

With Robin Hahnel

• Looking Forward (SEP, 1991)

• Political Economy of Participatory Economics (Princeton University Press,
1991)

• Quiet Revolution in Welfare Economics (PUP, 1990)

• Socialism Today and Tomorrow (SEP, 1981)

• Marxism and Socialist Theory (SEP, 1981)

• Unorthodox Marxism (SEP, 1978)

With David Dellinger

• Beyond Survival (SEP, 1983)

Multi-Author

• Talking About A Revolution (SEP, 1998)

• Liberating Theory (SEP, 1986)

Additional essays and other materials by Albert, Hahnel, and others, related to
economic vision and parecon can be found on ZNet (www.zmag.org) and especially
on the parecon subsite of ZNet (www.parecon.org)

310 PARECON

Additional Titles Referenced Herein
or of Special Related Interest

• R. C. D'Arge and E. K. Hunt, "Environmental Pollution, Externalities and
Conventional Economic Wisdom: A Critique" {Environmental Affairs no. 1,

1971)

• Sam Bowles, "What Markets Can and Cannot Do" (Challenge Magazine, July
1991)

• Harry Braverman, Labor and Monopoly Capital (Monthly Review, 1974)

• Pat Devine, Democracy and Economic Planning (Cambridge, 1988)

• Herb Gintis, "Alienation and Power: Towards a Radical Welfare Economics"
(Ph.D. diss., Harvard, May 1969)

• Daniel Guerin, Anarchism (Monthly Review, 1966)

• E. K. Hunt and R. C. D'Arge, "On Lemmings and Other Acquisitive Animals:
Propositions on Consumption" {Journal of Economic Issues 7, no. 2, June
1973)

• E. K. Hunt, "A Radical Critique of Welfare Economics," in Ed Nell ed. Growth,
Profits, and Property (Cambridge, 1980)

• Peter Kropotkin, Mutual Aid: A Factor of Evolution (New York University, 1972)

• Oscar Lange and Frederick Taylor, On the Economic Theory of Socialism
(Monthly Review, 1964)

• Ursula LeGuin, The Dispossessed (Harper and Row, 1974)

• Stephen Marglin, "What Do Bosses Do?" (Review of Radical Political
Economics, 1974)

• Alec Nove, The Economics of Feasible Socialism (George Allen and Unwin,
1983)

• Anton Pannekoek, Workers Councils (Southern Advocate for Workers' Councils,
Melbouren, 1951)

• Rudolf Rocker, Anarcho Syndicalism (http:// flag.blackened.net
/rocker/works.htm #Anarchism%20and% 20Anarcho-Syndicalism)

• Stephen Shalom, Socialist Visions (SEP, 1983)

• Jaroslav Vanek, The General Theory of Labor Self-Managed Economies (Cornell
University, 1970)

• Pat Walker, ed. Between Labor and Capital (SEP, 1979)

Index

abilities, differing 55-61
Albert, Michael 253, 302
allocation 11, 19-20

alternative systems 118-22

central planning 49, 51-4, 118-19
information and communication 122-7
institutions 20-1
long-range planning 219-21

market economies 11-12, 20, 66-7, 75-6, 118-19, 275-6

needs-based 282-5

organization 127-8

parecon 167-9, 219-27

anti-capitalist globalization 4, 6-8

artists, parecon and 244-7

Australia 15

balanced job complexes 10-11, 104-11, 115-16, 126-7, 136, 148-51,
155, 170, 176-7, 195-6, 207, 245, 272-4

Bellamy, Edward 33-4, 76-7

black markets 267-9

Bowles, Sam 66-7, 68

Brazil 14, 15

budgeting

participatory 15, 16

social needs 282-3

Burke, Edmund 64

busybody economy, parecon as 254-5
capital, ownership, and wealth 29-34, 245

capitalism 24-5, 78
alternatives to 8-9, 12
class structure 161
collective consumption 208-10
decision-making 181-3
individual consumption 212-13
innovation 250-2
jobs under 241-2
publishing example 173-4
rejection 1-2

"there is no better alternative" 122-3
work experience 194-5
capitalist globalization 2-4
replacing 7-8
capitalists 26, 78
Carlyle, Thomas 64

central planning 20-1, 49-55, 263, 266-7
allocation 11, 12, 49, 51-4, 118-19
compared with participatory planning 271-4
centrally planned socialism 1, 12, 24-5, 80
children, provision for 282
China 50

Chomsky, Noam 1, 290

class structure 8-9, 25-6, 44

capitalism 161

central planning 50-1, 54

corporate division of labor 46-7, 69-70, 104-5

market economies 69-70, 77

parecon 160-1, 169-70

clean air 145

312 PARECON

co-housing communities 213-15, 216

Collective Consumption Facilitation Board 210-12, 216-17

communication, allocation and 122-7

competition

capitalism 78

differing abilities 57-8

market economies 71-2

consumers

central planning 50, 52-3
demand 202-3
individual 214-15

information and communication 122-8
market economies 66
preferences 75-6

consumers' councils 93-4, 151-2, 165

decision-making 94-102, 258-9

participatory planning 128-35, 154-5, 189-90, 211

consumption 19-20

on basis of need 116-17

collective 138-43, 208-12, 215-17

externalities 166-7

individual 143-5, 212-15

opportunities 233-4

organization 258-9

personal 214-15, 217-18

planning 128-9, 215-18

preferences 162

self-management 165-7

cooperatives, workers and consumers 14

coordinators, decision-making 181-2

corporate division of labor 44-9, 69-70, 104-5

councils

decision-making 9
parecon 91-102, 210-11
creativity, parecon and 244-7
Cuba 50

cultural institutions, markets as 66-7

D'Arge, Ralph 71
decision-making
allocation 168-9
capitalism 181-3
consensus 94-102
consumers 94-102, 258-9
councils 9
diversity 160
economic 23-4
expertise 150-1
norms 39-41
parecon 183-4, 257-8
participation 149, 150-1
planning 204-6, 263-4
private ownership 43-4
self-management 155, 163-9
workers 69-71
demand

consumers 202-3
participatory planning 133-4, 223
democracy 261
decision-making 9

market economies 68-9

workplace 45-6

desirability, job complexes 103-5
Devine, Pat 256-7

dictatorship of the sociable, parecon as 255-6
diversity

corporate division of labor 48
economic values 41, 55
parecon 159-62, 244-7
division of labor 21-2

Index 313

capitalism 78

centrally planned socialism 80
corporate 44-9, 69-70
market economies 58-9
market socialism 79

Eastern Europe 50

economic decision-making 23-4

economic distribution 119-20

economic values

diversity 41

efficiency 42

equity 28-38

self-management 39-41
economics, participatory
see parecon economy
defined 19-20

dynamics and institutions 20-4
types of 24-5

education, remuneration and 36-7
efficiency

economic values 42
market economies 71-8
parecon 194-7, 231-7
elitism 56

Emma Goldman community 213-15, 216

employees, hiring and firing 205-6

Employment Facilitation Boards 206-7

empowerment, at work 104-11

equity 13-14, 54

circumstances 38

corporate division of labor 47-8

income 28-38

markets 55-64

parecon 157-8

quality and 244-7

externalities

consumption 166-7

market economies 60-1, 71-2, 74-6

participatory planning 138-47

facilitation boards 154, 185, 189-93, 206-7, 210-12, 215-18, 221-7,
271-4, 279

federations, consumer's 93-4
Folbre, Nancy 253
free rider problem 76
Friedman, Milton 77, 152-3

gasoline, environmental impact 145
Gates, Bill 9, 114
global exchange 4-7

Global Investment Assistance Agency, proposed 5, 7, 8
globalization, capitalist 2-4
green bans 15

green bioregionalism 1, 24-5, 80-3

Flahnel, Robin 253

health, impact of smoking 144

health care 282-3

hierarchy, division of labor 21

hospitals, public and private 209

households, collective

consumption planning 216-17

human nature, views of 289-93

human relations, market economies and 64-5

Hunt, E.K. 71, 74

IBM 73
incentives

income differentials 153-4
training 235-6
workers 252
income

314 PARECON

allocation 55-6
differentials 58-64, 234
distribution 43
equity 28-38

individuals, parecon and 261-3
information
allocation and 122-7
central planning 49-50, 51-2

market economies 66

innovations, parecon 185-8, 246, 250-2, 275-6, 277
inputs, planning 184-5
International Asset Agency, proposed 5, 7, 8
International Monetary Fund (IMF) 4-5, 6, 7, 69
international relations, bottom-up institutions 6-7
international trade 2-4
investment, participatory planning 220-5
invisible hand 71, 76

Iteration Facilitation Boards (IFBs) 154, 185, 189-93, 215, 217-18, 221-
7

Jefferson Park 208-10
Jesse Owens Airport 204-6
job changing, parecon 108-9

job complexes, balanced 10-11, 104-11, 115-16, 126-7, 136, 148-51,
155, 170, 176-7, 195-6, 207, 245, 272-4

John Henry Steel Plant 197-204

justice, remunerative 113-17

Kerala 15
Keynes, J.M. 78

labor, remuneration and 34-5

labor markets, traditional 108

labor unions 15

labor/leisure trade-off 239-43
leadership, workplace 196
LeGuin, Ursula 212-13, 253
Lekachman, Robert 74
Levy, David 253, 257

MAI 69
managers

central planning 49-51, 52
decision-making 70-1, 181-2
market socialism 79
marginal productivity, labor 34-5
market competition 3
market economies

allocation 11-12, 20, 66-7, 75-6, 118-19, 167-8, 275-6

diversity 161-2

division of labor 58-9

efficiency 71-8

equity 55-64, 113-14, 156

participatory planning as market allocation 265-71
public goods 211-12
re-equilibria 277

self-management 68-71
solidarity 64-7, 156, 158
workload 239-40

market socialism 1, 12, 24-5, 79-80, 113-14
markets, limited, parecon 275-81
Martin Luther King County 210-12, 215-18
Marx, Groucho 34
Marx, Karl 64-5, 239

means of production, private ownership 43-4, 89-90, 112, 170
meetings, too many 256-60
meritocracy 248-50
Microsoft 73

Index 315

Mill, John Stuart 1

minority groups, workplace 178

Morris, William 2

motivation

parecon 231-7

workplace 196-7

Mozart, W.A. 114-15

multinationals 4, 5, 69

NAFTA 69

Northstart Press 174-81

efficiency 194-7
participatory planning 184-93
Nove, Alec 118-19, 121-2

opportunity cost, social 123-6

outputs, planning 184-5

overtime, parecon 200-1

ownership 20

capitalist relations 26, 245

means of production 43-4, 89-90, 112, 170

parecon 24-5

allocation see allocation

attainability 301-2

collective consumption 210-12

compatibility with other institutions 286-8

councils 91-102

criticism 229-30

decision-making 94-102, 183-4

diversity 159-62, 244-7

efficiency 231-7

equity 157-8

excitement 300-1

human nature and 289-93
individual consumption 213-15
individuals vs society 261-4
job complexes 103-11
limited markets 275-81
meeting time 256-60
ownership 89-90
privacy vs participation 253-60
productivity 238-43
progress 248-52
provision for need 282-5
quality and equity 244-7
remuneration 112-17
self-management 163-9
solidarity 158-9
summary 8-13, 84-5, 155-6
vision 13-16, 294-9

participatory planning 12, 15, 21, 128-35, 138-47, 154-5, 158, 162,
168-9, 177-9, 184-93, 211, 220-5, 259-60, 262-3

as central planning 271-4

iterative process 129-32, 133, 136-8, 177-8, 188-93, 197-8, 220-7,
259-60

as market system 265-71

people, differing abilities 55-61

personal contribution, remuneration and 34-7

Pigouvian taxes 75, 76

Pitt, William 118, 119

planners, central planning 49-51, 51-4

planning

consumption 128-9, 215-18
convergence 134-5
decision-making 204-6, 263-4
evaluation 202-3
externalities 138-47
flexible updating 132-4, 278-81
individual decisions 238-9
long-range 219-21, 262-3
production 198-200
typical process 136-8
workplace 197-204
political institutions, markets as 66-7

316 PARECON

pollution 208

power, economic agents 39-41

precautionary principle, approach to uncertainty 295-9

prices

as communication tool 123-6

indicative 131-2, 136, 140, 151-2, 154, 223

market economies 75-6, 277

private ownership 8-9, 43-4, 78

elimination 79, 89-90

means of production 89-90, 152-3, 170

producers, market economies 66

production 19-20

alternative schemes 198-200

evaluation 202-3

planning 128-9, 279-81

self-management 163-5

productivity, parecon 203-4, 238-43

profits, maximization 72-4, 239

progress, parecon 248-52

property

income and 29-34, 114
inheritance 31-2, 152-3
ownership 20, 89-90
public goods
consumption 208-12
parecon 210-12
publishing

capitalist 173-4
participatory 174-81

qualitative information
central planning 52, 53
market economies 66
parecon 127, 223, 226-7

Reaganomics 76

red-light principle, approaches to uncertainty 295-9

reform, consequences 297-8

regions, self-sufficiency 81

remuneration 10-11, 14, 22-3

corporate division of labor 47-8

for effort 112-17, 152-4, 155, 170, 207, 231-3, 282

evaluation for 115-16

justice 113-17

market economies 58-64, 152
merit 249-50
norms 28-38
talent and 152-3
rent-seeking 72-3

Ricardo, David 34

Robinson, Joan 35

Salieri, Antonio 114-15

Schor, Juliet 239, 242

sectarianism, danger of 294-9

self-management 39-41

central planning 53, 54

consumption 165-7

corporate division of labor 45-6

decision-making 151, 155, 163-9

market economies 68-71

parecon 163-9, 262-3

self-sufficiency, regions 81

selfishness 290-1

Smith, Adam 21, 26, 30-1, 71

smoking, health impact 144

social contract 30

social costs, goods 140

social Darwinism 291

social institutions, parecon and 286-8

social opportunity cost 123-6

socialism 79-80

economics 1, 12, 24-5, 156

Index 317

society, parecon and 263-4, 282-5

solidarity 41, 44, 54

corporate division of labor 46-7

market economies 64-7

parecon 158-9, 188

solidarity economics 14-15

Solow, Robert 76

Soviet Union 50, 266-7

supply, participatory planning 133-4, 223

talent

income and 152-3
parecon and 244-7, 268-70
scarce 149-50
technology, oppressive 297
Thatcher, Margaret 121, 122
Tobin, James 76
training, incentives 235-6
transaction costs 76

uncertainty, approaches to 295-9

wages, just 62-3
wealth, distribution 1
welfare economics 74
work

enrichment 194-5
measures 126-7
organization 9-11
workers 26
capitalism 78

central planning 49-51, 52-3
cooperatives 14

decision-making 69-71
market socialism 79
plant operations 185-8
workers' control 14-15
hiring and firing 205-6

incentives 252

information and communication 122-8

market economies 65-6

workers' councils 70, 92-3, 106, 108

decision-making 94-102

participatory planning 128-35, 154-5, 177-9

working conditions, remuneration and 38

workplace

collective 14

democracy 45-6, 92-3

equal ownership 9

innovations, workers' input 185-8

minority groups 178

motivation 196-7

parecon 104-11, 257-8

planning 197-204

self-management 163-5

working week 179-81

World Social Forum 16

World Bank 4-5, 6, 7, 69

World Trade Agency, proposed 5, 7, 8

World Trade Organization (WTO) 4-5, 6, 7

Yugoslavia 70